Gallagher Re published "Options and Opportunities," its First View report on the April 2026 renewal, on April 8. The headline is a North America property catastrophe index down 20 percent risk-adjusted, the softest April print since 2017, with cyber non-proportional off 32 percent and Japan property cat off 16 percent.

April is a small book next to 1/1. It matters because it sets the expectation that the June and July renewals negotiate against.

-32%
Cyber non-proportional risk-adjusted rate change at April 2026 (Gallagher Re First View)
-20%
North America property catastrophe risk-adjusted rate, softest April since 2017
-16%
Japan property catastrophe risk-adjusted rate at April 1 per Gallagher Re

Key Takeaways

  • 20 percent down on North America property cat, the largest April risk-adjusted decrease since 2017. Loss-affected layers still cleared 5 to 12 percent below prior-year rates, which is the part that shows capacity rather than experience is setting price.
  • $30 to $35 billion of retained earnings against $20 to $30 billion of new capital in the year's $65 to $85 billion increase in reinsurance capital. The larger half compounds rather than redeems.
  • 32 percent off cyber non-proportional, of which roughly 20 to 22 points is rate and 10 to 12 points is the shift out of excess-of-loss into quota share and sidecar structures.
  • 20 against 14 on the same US market: Gallagher Re's risk-adjusted index and Guy Carpenter's Rate Pressure Index measure different books, with Aon between them at 15 to 18 percent.
  • 15 to 20 percent is the base case at June 1 on loss-free cat-exposed Florida layers, carried across from the April cat-exposed print rather than from any Florida-specific data.

What the April Index Actually Measures

The First View publishes a risk-adjusted rate change that blends loss-free and loss-affected layers, strips out changes in limit and attachment, and weights by premium. It is an index, not a uniform cut, and the layers underneath it moved by very different amounts.

Loss-free working layers, sitting above the retention and below the first cat-exposed layer, took the steepest reductions, in the mid-20s risk-adjusted. Cat-exposed loss-free layers, higher in the stack and exposed to 1-in-100 and 1-in-250 year events, moderated to the high teens and low 20s. That is where cat bond capacity competes most directly with traditional limit.

Loss-affected layers, including programs carrying 2025 Helene development or exposure to the March 2026 severe convective storm cluster covered in the Allstate $925M March cats analysis, softened by 5 to 12 percent depending on development. Negative, on layers that took losses, is the more informative number in the report.

The arithmetic on a single layer is small and concrete. On a $100 million excess of $300 million loss-free program, a 25 percent risk-adjusted cut at flat limit and attachment takes rate-on-line from roughly 8 percent to 6 percent, or about $2 million of ceded premium. Japan at 16 percent puts property cat rate-on-line some 18 to 20 percent below the April 2024 peak, though still above the April 2021 level, consistent with the Japan April 2026 renewal read.

Retained Earnings, Not New Capital

Whether the softening survives the mid-year renewals depends on which pool of capital grew, and the split is not close.

Reinsurance capital across traditional and alternative markets reached an estimated $785 to $805 billion at year-end 2025 against roughly $720 billion a year earlier, an increase of $65 to $85 billion. The top 20 global reinsurers posted $40 to $45 billion of 2025 underwriting profit plus $15 to $20 billion of investment income on the float; net of dividends, retained earnings contributed roughly $30 to $35 billion of that growth.

New capital contributed the smaller share, roughly $20 to $30 billion, weighted toward alternative structures. Cat bond outstandings crossed $64 billion after a record first quarter, detailed in the Q1 2026 cat bond issuance analysis, and private ILS funds and third-party capital platforms scaled alongside.

The composition is what makes the April print predictive. Retained earnings compound and stay unless a loss event consumes them; ILS capital can redeem after one. A softening carried mainly by retained earnings therefore persists into June 1 and July 1 absent a May or early-June Atlantic landfall, which is why 15 to 20 percent risk-adjusted on loss-free cat-exposed Florida layers is the base case rather than the optimistic case.

None of that changes an expected loss distribution. A 20 percent risk-adjusted rate reduction at flat loss cost is margin compression for the reinsurer and expense relief for the cedant, and nothing more. Reverse-engineering a softer market into a softer loss-cost assumption is the error the April print invites, and it is the one that shows up two accident years later in ceded reserve adequacy.

Why the Headline Overstates the Price Move

Three brokers priced the same US market at 20, 14 and 15 to 18 percent down. The spread is methodology, and it decides how much of the headline a cedant can actually bank.

Gallagher Re's risk-adjusted index weights placements by economic limit and includes new capacity, so a quota share or sidecar wrapper entering at a lower blended rate than the excess-of-loss it partly replaces moves the index directly. Guy Carpenter's Rate Pressure Index is scoped to traditional excess-of-loss renewing on comparable panel structure and de-emphasizes mix shift. Aon publishes commentary rather than a branded index. Neither construction is wrong; on like-for-like excess of loss, 15 to 18 percent is the defensible working figure.

Cyber is where that distinction has real money attached. Primary loss ratios stabilized in 2024 and improved in 2025 as ransomware frequency moderated off the 2023 peak, which supports genuine rate relief, and S&P's February 2026 cyber outlook flagged the decoupling from primary loss trend. But the steady migration from excess-of-loss into quota share and sidecar structures since 2023 cedes more premium per dollar of limit, which mechanically depresses a limit-weighted index.

Split the 32 percent and roughly 20 to 22 points is rate with 10 to 12 points mix. A cedant budgeting a 32 percent cyber reinsurance expense reduction against unchanged expected losses is overstating the relief by about a third, and the gap lands in the net retained position rather than in the ceded premium line.

The softening is also not uniform across the book. Marine war and political violence kept firming through April and cleared above the April 2025 baseline, and US casualty exposed to social inflation ran flat to up on loss-affected layers. Where loss trend is still firming, a capacity overhang does not reach the price.

Further Reading

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