As the insurance industry enters what Howden Re describes as “a hard market, softening,” capital and operational solutions are becoming increasingly important for insurers seeking efficiency and resilience. Alexander Roth, Managing Director and Head of Capital & Operational Solutions Europe at Howden Re, discussed recent shifts in client priorities and the evolving landscape for reinsurance.
Roth noted that over the past year, his team has grown to include professionals from various backgrounds such as underwriting, capital modeling, actuarial science, and asset management. This multidisciplinary approach aims to help clients address complex capital and operational challenges.
“In this market, we see clients now prioritising strategic, long-term partnerships over transactional solutions, expecting tailored advice aligned with their strategy and capital priorities. This has made asset–liability matching, capital efficiency, and customised structured solutions C-suite priorities as insurers prepare for softer market conditions,” said Roth.
He emphasized that Howden Re differentiates itself by not focusing on single products but instead framing solutions around financial targets and capital optimization. “Our Capital & Operational Solutions practice works holistically with clients, combining structured reinsurance, market risk advisory, and operational efficiency strategies. The aim is not to ‘sell’ a solution, but to align with a client’s strategy and co-develop a tailored framework that helps them meet financial targets as well as mid- and long-term strategic objectives.”
Looking ahead to upcoming industry conferences such as Baden-Baden and APCIA, Roth expects discussions will focus less on pricing cycles and more on how insurers can manage volatility through asset-liability matching and balance sheet efficiency. He highlighted ongoing concerns about inflation risks tied to central bank policies: “The industry is mindful that cutting rates too early could reignite inflation, creating renewed strain on underwriting results and reserves.”
Roth also observed changes in client behavior: “Clients increasingly value strategic, long-term advisory relationships over transactional, product-led solutions...They expect partners to invest the time to understand their strategy...and then co-develop tailored solutions.” He added that board-level conversations now center on delivering returns for shareholders while optimizing capital efficiency before anticipated softer markets take hold.
A notable trend is the broader use of structured reinsurance beyond traditional applications. Retrospective legacy deals are being used more widely for strategic purposes like earnings protection rather than just operational needs. Prospective solutions are also being customized for risk management goals amid changing regulatory requirements.
“The most significant factor [shaping deal activity] will be pressure on financial returns as underwriting margins tighten,” Roth said regarding the next 6–12 months. He pointed out opportunities arising from inflation-driven reserve volatility—particularly in retrospective transactions—and noted growing interest among reinsurers in these structures for both capital relief and earnings protection.
There is also an increasing shift toward non-traditional sources of risk transfer such as catastrophe bonds (cat bonds) and insurance-linked securities (ILS). These instruments are now being adopted by more conservative European insurers looking to diversify their capital base—a trend expected to accelerate further across the sector.
Operational efficiency remains another priority area due to scrutiny over expenses and claims costs; many insurers are implementing measures aimed at maintaining consistent performance despite challenging conditions.
Discussing future developments in capital solutions delivery models at Howden Re: “Our practice is not tied to the reinsurance renewal cycle in the same way traditional treaty placements are...The tools we use - structured reinsurance, operational optimisation...are levers that can be pulled year-round...” This flexibility allows companies dynamic management of financial performance outside fixed seasonal windows.
Structured reinsurance continues to play a role in providing solvency relief while helping clients manage earnings volatility—especially important given elevated natural catastrophe retentions faced by cedents today. Such approaches enable gradual introduction of protection alongside traditional covers.
Referencing Howden Re’s report “Who dares wins - Innovation in an era of hard market softening,” Roth concluded: “Managing emerging risks calls for targeted solutions that address protection gaps...At Howden Re we have made it a priority to advance such solutions...” Aggregate covers designed for concentration management were cited as examples intended to bolster portfolio resilience against loss volatility.