Ample capacity to keep pressure on European casualty pricing: Howden Re

European casualty treaty pricing is likely to come under greater pressure at 1/1 2027, as ample capacity and softer property conditions continue to push reinsurers towards casualty in search of return.

That is the view of Wolfram-Ferdinand Schultz (pictured), head of casualty treaty for continental Europe at Howden Re, who said the market is moving into the next renewal with more pricing pressure than at 1/1 2026 even though familiar concerns around reserve adequacy, litigation funding and inflation have not disappeared.

“The EU original rates are flat to decreasing,” Schultz said in an interview with Intelligent Insurer. He added that current renewal discussions indicate “the price reduction on treaties is more than likely at a higher scale compared to 1/1 2026”.

The current pricing trend reflects the wider reinsurance backdrop. Strong reinsurance returns in 2023 and 2024, record dedicated capital and softer property conditions are all helping push more capacity into casualty.

“The capacity is available,” Schultz said, arguing that “rate adequacy can still be observed”, with pricing still on a higher level than in earlier years.

He made clear that “the European market is definitely different from the American market,” where pricing is still being shaped much more heavily by nuclear verdicts, litigation funding and reserve strain.

At the same time, he cautioned that European reinsurers cannot fully detach themselves from US casualty pressures, because multinational books still bring US exposure into European portfolios.

“When we talk about US casualty risk and European casualty risks, you always at the edges, you always have US exposure in there,” he said.

That distinction matters because it shapes how reinsurers are deploying capital. The current increase in capacity, he suggested, is being driven by broader market conditions as much as by casualty fundamentals.

“Property softening is something which we really need to take here into consideration,” he said, because it is “pushing capital to hunt return elsewhere”.

He expects that backdrop to continue shaping the next renewal. “We think capacity will be ample,” Schultz said. “We think that the softening will continue.”

Still, he warned the direction of travel could change quickly if capital is pulled back into property. “If we have got an active hurricane season, things could swing very, very, very quickly,” he said, adding that non-casualty lines could end up having more influence on casualty pricing than casualty itself.

On alternative capital, Schultz said some ILS and structured long-tail capacity is coming into the market, but argued this may remain less relevant in continental Europe than in the US or London. In his view, that comes down largely to buying culture: continental buyers tend to want exposure removed from the balance sheet rather than temporary relief for a fixed period.

Beyond pricing, Schultz said the market should keep a close eye on Europe’s changing legal environment, particularly the EU Product Liability Directive 2024, which “will definitely have an impact on the legal environment”.

He also took a more measured view on PFAS than some broader market rhetoric might suggest. While “PFAS is a threat”, he said “the systemic exposure might be overrated”, because “you still need to have casualty as a point”.

Schultz will be sharing more of his views on casualty market direction at Intelligent Insurer’s Re/Insurance Outlook conference in Zurich this week.

Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.