The next era of facultative reinsurance has begun: Howden

As the hard market softens, Luigi Boglione, of Howden Re, explores how facultative reinsurance is evolving from a transactional tool into a strategic lever for cedants to manage volatility, optimise capital and unlock growth.

Key points:
Fac moves from transactional to strategic
Cedants looking for more than just capacity
Growing interest in SME portfolio solutions

As the hard market softens, Luigi Boglione, managing director, head of international fac, Howden Re explores how facultative reinsurance is evolving from a transactional tool into a strategic lever for cedants to manage volatility, optimise capital and unlock growth.

The softening of direct rates is creating space for facultative reinsurance to step in with greater precision and agility. As highlighted in our report “Who dares wins: innovation in an era of hard market softening”, rates have eased from recent peaks but remain elevated, setting the stage for cedants and reinsurers to innovate and collaborate in new ways.

A market in transition

In London, for example, the property and energy business shows, on average, a double-digit rate reduction, while construction is also softening with more relaxed terms and abundant capacity. Underwriting discipline remains robust as reinsurers are deploying capital more selectively, prioritising technical execution over simple market-share growth.

Simultaneously, we are seeing a clear shift towards facilities and portfolio-style solutions. These respond to cedants’ demand for speed and scale by bringing faster quoting, broader coverage and operational efficiency. AI integration and platform-based solutions accelerate this trend, delivering enhanced data accuracy and greater scalability.

The focus is shifting from simply completing transactions to providing strategic value. Cedants are looking for more than just reinsurance capacity; they want solutions that support their long-term business goals. International fac is evolving from covering isolated risks to becoming a tool that helps cedants achieve growth and manage their portfolios more effectively.

The role of international fac

Clients are using facultative reinsurance to optimise retention, manage earnings volatility and complement treaty programmes. In the Nordics, for example, several insurers that historically retained most of their risk are now ceding selected exposures. In other markets, cedants are retaining more risk where local target pricing makes facultative uneconomic, while still using it to buy out particular perils or locations when risk profiles change.

Facultative purchasing has become more strategic, serving as a key tool for navigating elevated risk environments, especially secondary perils. For fac brokers, success will depend on superior data, geographic spread and technical execution.

At Howden Re, combining facultative with treaty, capital markets, analytics and programme capabilities is essential and uniquely positions us in the broking landscape.

In Europe and elsewhere, we are pairing long-standing clients with non-traditional capacity, developing multi-line, multi-year programmes for captives in the large and complex business space. These solutions often blend traditional facultative capacity with alternative capital, delivering more resilient structures.

At the other end of the spectrum, there is growing interest in SME portfolio solutions. Here, facultative only becomes efficient when delivered at scale, so portfolio approaches are gaining traction. We are also seeing new demand for catastrophe cover in Europe for SRCC covers in politically tense geographies and also for cyber and renewables.

Even as technology and platforms reshape how we transact, the human element remains critical. Local presence is central to our model. We now operate in around 30 countries, with more than 200 facultative specialists, including over 100 in the international team. In London alone, our team speaks 15 languages, enabling us to work closely with clients whether they prefer face-to-face negotiations in their own language or centralised placement through international hubs.

Proximity unlocks agility. Local brokers understand regulatory shifts, cultural nuances and emerging risks and, when combined with the scale of an international platform, this creates a one-team model that aligns closely with how our clients operate.

The year ahead

Looking ahead, three forces will shape the market: expanding facilities and portfolio solutions for speed, deeper long-term partnerships for stability and rising competition on service quality beyond pricing alone. Pricing is likely to remain broadly stable, perhaps modestly down in areas with plentiful capacity, but underwriting discipline will remain tight.

The next phase of the market cycle will be led by those who invest in the right people and tools. It is not just about hiring; it is about shaping both new and established talent to think differently, challenge assumptions and deliver fresh solutions to complex problems. Innovation will be vital in addressing secondary perils such as wildfires and floods, where facultative reinsurance can act as a precision tool.

As we move from hard conditions into a more competitive equilibrium, the market leaders will be those who embrace international fac as a growth catalyst, using it to shape portfolios, manage volatility and unlock new opportunities.

Luigi Boglione is the managing director, head of international fac at Howden Re. He can be contacted at:  luigi.boglione@howdenre.com.

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