Record Capital, Softer Terms: What the 2027 Renewals Mean for Latin America’s Cedents and Reinsurers

Gallagher Re puts dedicated reinsurance capital at about $688 billion at mid-2026, while AM Best and Fitch both expect further softening into 2027. In Latin America, July property catastrophe rates fell 15–20% and ceding commissions rose.

Capital has outrun demand

Gallagher Re’s H1 2026 report, covered by Insurance Business on 3 September, puts dedicated reinsurance capital at about $688 billion, a record, with non-life alternative capital near $147 billion. The reinsurance composite earned a 19.9% return on equity in the half, the second-highest half-year result in a decade. Gallagher Re’s head of property, Keith Lippmann, describes property buyers as being in their strongest negotiating position in more than a decade.

AM Best, in an August outlook reported by Artemis, expects underwriting results to normalise further through 2026 and competitive pressure to rise in 2027, with some deterioration in results due largely to rate declines. It also notes that hard-market structural changes, namely higher retentions and reduced participation in lower layers, have largely remained intact. Fitch, reported by Reinsurance News on 25 August, expects pricing to soften further at the January 2027 renewals and puts risk-adjusted ROE in the low teens against a cost of capital of 8–9%. Fitch also warns that casualty rate adequacy could fall in 2027.

Latin America: more capacity, more creativity

Howden Re reported that property catastrophe excess-of-loss programmes in Latin America saw rate reductions of 15–20% at the 1 July 2026 renewal, while ceding commissions on proportional business rose by a further two to three points. Cedents are buying smaller cat XoL limits as proportional cessions increase, and capacity is arriving from Bermuda, London and MGA markets alongside established local players. Howden also notes that parametric covers are moving from a niche consideration to a more broadly evaluated alternative, and that appetite is extending into casualty and specialty lines. These are broker-reported figures from a single renewal, not a market-wide index.

For Power Re, the message is discipline over share. Rising ceding commissions and falling cat rates reward reinsurers that chase volume; they penalise those that cannot defend margin. Our specialist Group Life & Personal Accident LATAM focus sits largely outside the property-catastrophe price cycle, and it is underwritten on mortality and morbidity experience, pricing adequacy and clean wordings rather than on capacity-driven rate erosion. In a market where capital is abundant, the credibility that rating agencies reward is the willingness to decline business that does not meet technical price.