MS Re CEO Wiest: Reinsurers approaching break-even point, divergence to come in 2027

MS Reinsurance CEO Robert Wiest has warned that if the current trend in the reinsurance market continues, the sector could reach break-even point as early as 2027. Wiest said that as margins erode further, some companies could slip into losses.

Speaking to Monte Carlo Today, Wiest said, "We are approaching what I call the break-even point," adding that 2026 would not be that point, but rather could turn out to be an excellent financial year.

According to Wiest, this picture could conceal the underlying reality. Noting that if the current course continues, 2027 could be a break-even year for reinsurers, with some likely slipping into losses while others remain above water, Wiest said he views 2027, and particularly the latter part of the year, as decisive, and that in the years ahead, an increasing number of reinsurers will begin to lose money.

What stands out about the warning is that Wiest still expects strong results for 2026. Noting that the low level of catastrophe activity so far has contributed to profitability, Wiest said it would not be possible for every reinsurer to remain profitable under a more average loss burden.

Not a single cycle

Wiest does not believe the market is moving uniformly toward the bottom. He said there is no single cycle, but rather numerous micro-cycles across lines of business, regions and customer segments. He noted that some specialized reinsurers could still find themselves in attractive areas, while others may have already hit bottom.

Noting that MS Re has been preparing for this scenario for several years, Wiest said the company has built its forecasts, business planning and investment decisions on the assumption that 2027, 2028 and 2029 will bring a softer cycle. Stating that they never planned for a straight upward line, Wiest said companies that assumed the market would continue on a positive linear path are facing problems today.

This planning builds on the four-year transformation carried out at MS Re since Wiest took office in January 2022. During this period, the company rebalanced its portfolio, overhauled its operating platform and strengthened its underwriting capabilities. Wiest had announced in May that MS Re had moved past its transformation phase into the next stage of its development.

Selectivity in growth

The softer outlook does not mean MS Re will halt growth. However, Wiest said that instead of increasing the number of clients to maintain momentum, the focus is on doing more business with cedants it already knows. He said that in a softening market, they are leaning more than ever toward selective growth from clients they know and understand.

Wiest said that the growing interconnection of risks across insurance and investment portfolios makes this approach even more important.

Cautious stance on cyber

Cyber is one of the areas where MS Re is acting more cautiously. Pointing in particular to the uncertainty created by artificial intelligence, Wiest said cyber remains a major unknown and that it must be acknowledged that less is known about it compared to last year. Noting that the problem lies at the very foundation of underwriting, Wiest said that where risk cannot be measured, price cannot be quoted either.

That said, Wiest does not believe retreat is a sufficient response. Questioning whether insurers and reinsurers can afford not to provide cyber protection given societies' growing dependence on technology, Wiest said cyber should be treated not simply as a business opportunity but as a societal responsibility.

Access to capital and the partnership question

Wiest believes that as conditions become more difficult, access to capital will continue to be a critical differentiator despite the current abundance. He said that for cedants, the real issue is not whether a reinsurer will have capacity at the next renewal, but whether that capital will remain reliable when economic conditions become significantly more challenging.

According to Wiest, the defining question for reinsurers in the next phase of the cycle is this: is it a transaction-focused reinsurer, or a long-term, partnership-focused one?

Noting that both are legitimate models, Wiest said the problem arises when reinsurers promise one thing and then behave differently once margins narrow. Emphasizing that realism matters as much as honesty, Wiest said some reinsurers, by overpromising, put at risk their capacity to be sustainable long-term partners.

Wiest said a future-ready reinsurer needs a business model that can preserve its access to capital in nearly any market condition, adding that without this, a company's business is effectively over.

For now, the market continues to soften and profitability is being maintained. Wiest's warning, however, is that the results reinsurers are announcing today may not reveal how close this test actually is. Noting that everyone already knows softening is underway, Wiest said the situation is now starting to show itself.