A diverse range of capital solutions will be in focus at January reinsurance renewals: Aon

As ILS moves from niche to core in EMEA, Aon’s Tomas Novotny expects that, amid strong profitability for reinsurers, a growing range of capital opportunities will make the approaching renewals fiercely competitive.

Key points:
ILS becomes core proposition
Reinsurance capacity floods back in
Profitability fuels risk appetite

ILS and alternative capital solutions have decisively stepped into the European reinsurance renewals conversation. No longer just supplementary layers for specific structures, their presence is now influencing how buyers and investors think about risk transfer.

Tomas Novotny, EMEA chief executive officer at Aon’s Reinsurance Solutions told Baden-Baden Today the shift was more than tactical. “As an example, for many years ILS has been one of the core parts of Aon’s capital proposition to our clients in the US,” he said. “This trend is now extending firmly into EMEA and is becoming an important part of capital optimization strategies along with other forms of risk transfer.”. For buyers, ILS solutions have offered capacity opportunities at times when traditional capital has been less keen to deploy but have now established their own position in the market as a core component of more cedents’ capital optimization strategies.

Across Europe and beyond, reinsurers are entering the new cycle from a position of strength. According to Novotny, profitability in the current market is undeniable. He noted that “the reinsurance market in EMEA and more globally is very profitable”, a situation that is encouraging carriers to stretch their risk appetite.

That confidence will continue to grow. “I see the current trend actually intensifying towards the January 2026 renewals,” Novotny said, pointing to a calm hurricane season and the notable resilience even when medium-level loss events emerge.

We have very successfully introduced several ILS deals in EMEA as part of a broader capital strategy.

“A $40 billion insured loss actually does very little to the profitability of the reinsurers,” he said. In his view, this illustrates a structural shift where reinsurers are no longer suffering after moderate losses but instead positioning to write more premium at hard market pricing.

With that mindset, clients preparing for renewal are expected to be assertive. Novotny observed that buyers “will be demanding rate decreases” and offering “more ceded limits, so more ceded capacity in terms of the volatility, but also in the tail”.

Aon will be at the centre of this dynamic, where the role of ILS and other capital options become more strategic. Although pricing parity between traditional reinsurance and ILS structures is not always straightforward in Europe, Novotny related that “we have very successfully introduced several ILS deals in EMEA in the past few years.”

He explained that buying motivations varied between purely price-driven ones, and those where “the strategy to de-risk from traditional ventures”, and diversification, were the key aims.

When asked which market segments offered the most opportunity, Novotny did not hesitate:  “Catastrophe reinsurance still dominates.” Describing it as “the largest reinsurance product”, he stressed that both buyers and sellers saw value in this area.

Buyers, he says, have an opportunity “to obtain more value in the current market dynamics out of the catastrophe reinsurance product”, while for carriers the chance to write more business in a hard market pricing cycle remains attractive. Cat business, it’s implied, remains the heartbeat of reinsurance relevance in Europe.

Technology, meanwhile, is reshaping processes rather than fundamentals, and Novotny is pragmatic about its pace. “The impact of AI and tech generally in our business is more evolutionary than a revolution,” he said. Although the core dynamics of risk transfer won’t change overnight, Novotny has already observed clear efficiency gains within Aon, suggesting that smarter workflows will ultimately translate into even better client delivery, faster analytics and improved placement visibility.

One dynamic he is especially keen to highlight is the rise of European state-backed initiatives to tackle the insurance protection gap. He pointed to activity in Italy, Germany and Greece, and said Aon was “very actively participating in all these initiatives” and proud to use its capabilities to bring unprotected risk and available capital closer together.

As the market anticipates the January 2026 reinsurance renewals, Novotny’s closing sentiment is focused on client value: “I am looking forward to supporting our clients through this very dynamic renewal season, and helping to drive better risk management decisions on their behalf,” he said.

Aon’s mission, he added, is to extract the maximum benefit from the shifting market for its clients. With abundant capital opportunities, and new public-private frameworks emerging, the coming cycle promises intensity, competition and opportunity in equal measure.

Tomas Novotny is the EMEA chief executive officer at Aon’s Reinsurance Solutions. He can be reached at: tomas.novotny@aon.com.

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