Agility will shape 1/1 renewals as market recalibrates on losses: VIG Re CEO

The reinsurance sector has shown remarkable resilience after a costly start to the year, but Tobias Sonndorfer, of VIG Re, contends that agility, discipline and deliberate action will be vital heading into 1/1 renewals.

Key points:
‘Recalibration’ drives market tone
Secondary perils demand agility
VIG Re stays deliberate, disciplined

The reinsurance market heads into the Rendez-Vous de Septembre this year with an intriguing mix of confidence and caution. Despite a bruising start to 2025 – not least the wildfires in California in January, which Sonndorfer describes as “a massive secondary peril event, for those who still consider wildfires to be secondary” – the sector has absorbed the shock and kept moving.

“We saw a very confident and proactive transacting reinsurance market. I haven’t had the impression there is fear,” he told Monte Carlo Today. “We see clients looking for practical reinsurance solutions and at the same time I expect we see capacity that wants to be deployed. Our expectation is that we see, in parts, a recalibration of pricing for programmes depending on loss history and pricing adjustments over the last two renewals.” 

“We‘re ready to transact, but not under any conditions.”

This “recalibration” is not the free-fall softening some analysts have hinted at. Instead, Sonndorfer sees the market adjusting to a subtle shift in supply and demand. Demand for reinsurance is still growing, he noted, but supply has also been plentiful, from traditional balance sheets and the alternative capital market, buoyed by record catastrophe bond issuance.

The result: “a market absolutely ready to transact”, albeit with one eye firmly on the approaching US hurricane and European wind seasons. “Everything we talk about now is pre-US hurricane season and pre-European wind season,” he cautioned. “We’ve got to take it with a pinch of salt.”

Resilience, risk and relationships

The ability to recover quickly from shocks is, Sonndorfer believes, the defining achievement of the past year. Losses from wildfires, severe convective storms and other complex, hard-to-model perils are becoming routine, with insured losses in the H1 2025 at $80 billion, materially higher than the past 10 years average. 

“We live in a world of elevated risk,” he said. “The challenge is how we develop solutions consistently that enable us to cover those risks efficiently – whether from climate change, supply chain disruption, cyber or geopolitics.”

In Europe, he noted, nat cat activity so far this year has been lower than in 2024 – a temporary reprieve rather than a sign of lasting structural change. “I would feel much more comfortable relying on a sustainable book and an alignment of interests with our clients, no matter whether it’s below or above average loss activity.”

Secondary perils, such as severe convective storms, he argues, demand both a societal and an industry response: societies need to adapt building practices, risk awareness and systemic prevention, while insurers and reinsurers must focus on portfolio transparency, structural discipline and improved modelling. 

“It takes time to get comfortable with those perils,” he said. “The capital markets took time with main perils in the ILS space; we’ll see a similar path on secondary perils. Modelling will improve, responses will improve – both within the insurance market and at the societal level.”

Long-term approach

For VIG Re, the answer lies in long-term relationships built on trust, transparency and what Sonndorfer calls “a true alignment of interests”. Despite market volatility, the company’s risk appetite remains “unchanged”, with a focus on structural integrity of deals and a balanced, resilient sharing of risk, in the frequency and severity space. 

“We take a prudent and underwriting-driven stance towards portfolios and towards our clients,” he said. “We do not intend to change that radically. For us, renewal is the finalisation of what we’ve already prepared together with our clients throughout the year, and a long-term approach only works if it’s profitable for both sides — not just economically, but at a high level so both benefit over time.”

Looking ahead, Sonndorfer defines being “future ready” as combining agility with the intelligent use of data and technology, alongside strong client relationships and sound technical underwriting. 

Back in Monte Carlo, where every conversation has the potential to shift renewal dynamics, he’s crystal clear: “We‘re ready to transact, but not under any conditions.” 

If there’s one message he wants the market to take away ahead of Monte Carlo, it’s that VIG Re is not drifting with the cycle but steering deliberately. “We do what we say, and we do it deliberately. We keep our eyes wide open to what’s happening around us, stay focused on individual client situations and specific portfolios and deepen relationships.”

Tobias Sonndorfer is chairman and Chief executive officer of VIG Re. He can be contacted at: info@vig-re.com.

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