Reinsurance must find a technical floor before soft market takes hold: DEVK Re

With excess margins narrowing and capacity plentiful, DEVK Re’s Fabian Pütz says the industry must find a sustainable floor without sacrificing technical discipline.

Key points:
Reinsurance increasingly key to DEVK
Offers important diversification
Discipline key in a softening market

Reinsurance is becoming an increasingly important part of DEVK’s portfolio. Since Dr Fabian Pütz was given responsibility for the business, through his roles on the board of DEVK and as CEO of Echo Re, he has been tasked with strategically growing it while navigating a softening market.

DEVK Re passed €1 billion of premium from non-DEVK business in 2025. Together with Echo Re, the two platforms now write some €1.5 billion in GWP, around 25% of DEVK Group’s overall premium income.

Pütz’s objective is to maximise reinsurance’s diversification contribution to the group while maintaining underwriting discipline and a long-term perspective.

Current capitalisation levels and unused catastrophe budgets for 2026 mean softening pressure may continue into renewals, he suggests. Yet he is careful with the terminology. “I would not yet call this a soft market, but the excess margins created after the hard market have clearly narrowed and in some cases even been depleted,” he told Monte Carlo Today.

He is keen to manage expectations. He says DEVK has made clear stakeholders should not expect high-teens to mid-twenties RoEs to persist indefinitely. Pricing is “normalising” and the industry has been “lucky” with benign loss activity in 2025 and 2026 so far, Pütz said. “On a normalised basis, results would certainly look somewhat different.”

“The market is at an important inflection point. The question is whether we collectively allow the cycle to move into a soft market phase, or whether we are able to establish a more sustainable new equilibrium,” he said.

Discipline must hold

“Historically, the industry has not always been effective at finding a floor at technically adequate levels.”

For Pütz, sustainable pricing is also about the wider role insurance and reinsurance play in supporting economies and societies. Allowing the market pendulum to swing too far in either direction can weaken that role, he said, making long-term discipline a shared responsibility across insurers and reinsurers. 

There is cause for some optimism. The market has remained firm on structures and attachment points. “Maintaining appropriate retentions and alignment of interests is just as important as headline pricing when it comes to preserving technical quality,” Pütz said.

“On pricing, the real test will be whether reinsurers are prepared to follow through on their stated willingness to walk away from business where terms move beyond what is justified technically or strategically.”

One difference this time is that the market’s strong capital position has largely been built within existing balance sheets, rather than through an influx of new third-party capacity.

“That means discipline is very much within the industry’s own control. If we speak about technical adequacy and cycle discipline, we also need to demonstrate it in how we deploy capital.”

That is not always an easy message to convey to shareholders when strong results naturally create pressure for growth.

“The challenge in reinsurance is that today’s underwriting decisions determine tomorrow’s results, while current earnings may still be supported by business written under more favourable market conditions. This creates a particular risk of underestimating cycle effects and accepting business that may look attractive in the short term but erode portfolio quality over time.”

A different perspective

He does have a benefit over many CEOs. Pütz’s responsibility for both the inward reinsurance portfolio and outward reinsurance purchasing gives him a perspective from both sides of the cycle.

“Discipline should not be seen only as a seller’s obligation. Buyers also face an important strategic choice: whether to push pricing to the absolute limit in the short term, or to allocate their reinsurance programmes in a way that strengthens long-term resilience with partners that have demonstrated reliability when market conditions were more difficult.” 

He expects the reinsurance portfolio to remain broadly stable in GWP in 2026, with no pressure to pursue short-term top-line targets.

“Our diversified portfolio across P&C, specialty classes and regions, combined with a competitive cost ratio and strong group capitalization, gives us resilience and allows us to maintain competitive hurdle rates without compromising underwriting discipline.”

There are nevertheless opportunities to grow in peak cat segments in North America and lines where DEVK has strengthened its technical capabilities, including international casualty.

“As part of a mutual group, we have the long-term commitment and mandate to grow the business in a disciplined, step-by-step manner. Retained earnings and a growing and already very strong capital base provide the foundation for this growth over time.”

Dr. Fabian Pütz is a board member of DEVK Re and chief executive of Echo Re. He can be reached at: Fabian.Puetz@devk.de / fabian.Puetz@echore.com 

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