Munich Re arrived at Baden-Baden this year with a specific number behind its argument for traditional reinsurance. In a media release, the reinsurer said the ratio of traditional to alternative reinsurance capital has moved from 3.5 to 1 in 2017 to almost 4 to 1 in 2026. Gallagher Re’s H1 2026 Reinsurance Market Report, compiled independently, puts the current ratio at approximately 3.7 to 1.
The significance is not that alternative capital has retreated. It has not. Non-life alternative capital grew 9% in the first half of 2026 to a record US$147 billion, according to Gallagher Re.
That traditional capital has grown faster is Munich Re’s own reading of the data. On that reading, the soft market pressure cedants are feeling heading into January 2027 is driven primarily by an expansion of traditional balance sheet capacity rather than by ILS displacement. That reframes where the pricing pressure is coming from, and for cedants evaluating counterparty selection in a buyer’s market, the distinction matters.
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Munich Re is not just making this argument rhetorically. Earlier this year, as confirmed in its February 2026 retrocession renewal announcement, it scrapped its Eden Re and Leo Re collateralized sidecar structures entirely, retaining only approximately US$600 million of traditional catastrophe excess-of-loss retrocession. The decision reflected Munich Re’s confidence in its own capital base. Its Solvency II ratio stood at 292% at end of March 2026, well above its stated target of greater than 200%, according to its Q1 2026 results. The group is now deploying that balance sheet directly rather than through capital markets vehicles.
The argument Munich Re makes most specifically in the release concerns the speed at which claims are paid when losses occur. After the 2023 Kahramanmaraş earthquake in Turkey, Munich Re said it deployed additional capital and paid some cedants within hours, with an average payment time of 4.4 days. After the Ahrtal flood in Germany in 2021, some payments were made the same day.
These are specific operational claims that go to one of the genuine structural differences between traditional and collateralized reinsurance. Munich Re argues that collateralised structures can take longer to release funds to cedants while ultimate losses develop, giving traditional reinsurers a liquidity advantage after major events.
Cedants managing liquidity after a major loss cannot wait months for funds while ultimate losses develop and certification is completed. The payment claims sit alongside a broader pattern of Munich Re’s commitment to European markets. Since 2020, it has increased its net natcat exposure in Germany flood scenarios by 27% annually and Turkey earthquake scenarios by 10%. Since 2020, it has increased net natcat exposure in Germany flood scenarios by 27% annually and Turkey earthquake scenarios by 10%.
Risk complexity is the other dimension Munich Re addresses. Some risks require underwriting expertise and long-term commitment that a capital markets structure cannot replicate, and cyber is its primary example.
The global cyber insurance market stood at nearly US$16 billion in 2025, according to Jürgen Reinhart, Munich Re’s cyber chief underwriter, who made the estimate in a public statement in July 2026.
In August 2026, Munich Re agreed to acquire US cyber insurtech At-Bay for US$575 million, bringing the company’s underwriting platform, security operations, and SME distribution directly under Munich Re’s ownership. The deal is a primary insurance transaction, placed under Hartford Steam Boiler, but it illustrates the integration of risk transfer with active risk prevention that Munich Re is describing as the future of the cyber market.
Patrice Michellon, chief executive for Continental Europe at Munich Re, said in the release that artificial intelligence, geopolitical tensions, and growing digital interdependencies are changing both the frequency and nature of cyber risk. Munich Re’s Global Cyber Risk and Insurance Survey 2026 found that 89% of companies feel inadequately protected.That figure is drawn from Munich Re’s own research and reflects its own commercial interest. The broader protection gap is real. The survey figure should be read as Munich Re’s estimate, rather than an independent measure.
Clarisse Kopff, member of Munich Re’s board of management responsible for P&C reinsurance in Europe and Latin America, said the world faces ever-increasing risks and that few reinsurers can combine dependable capital with deep expertise and the financial strength to pay large claims when they arise.
