2026 Executive Outlook | Marc Lipman, Lloyd’s Americas

Capital efficiency is an emerging theme poised to reshape the property and casualty (P&C) insurance industry in 2026.

With current trading conditions continuing to transition from a hard to soft marketplace — likely to be accelerated by the absence of an active Atlantic Cat season — competition is expected to intensify.

This means generating profitable returns will become increasingly challenging, prompting carriers and other capital providers to evaluate all available levers — especially capital efficiency.

Profitability, and return on capital, will depend not only on underwriting performance, but also on how effectively capital is structured, allocated, and leveraged.

Fronting arrangements, the entry of non-traditional capital into the industry, and the desire of significant distribution businesses to exercise greater control over capacity, are all reshaping how we think about capital deployment and efficiency. 

We have been deeply engaged in these conversations, both with traditional industry capital providers and institutional investors. New investment structures are redefining how capital enters the industry globally.

One example is London Bridge 2 (LB2), an investment vehicle allowing institutional investors to support underwriting businesses by converting reinsurance risk into financial instruments, bonds or equities. It’s gained real momentum, providing the global specialty P&C industry access to investors and capital that would otherwise not be available. 

LB2 has attracted $2.2 billion in capital over the past three years because it is highly flexible and able to respond to bespoke investor appetite. It has supported innovative reinsurance structures as well as new sidecar-style syndicates like AIG/Blackstone and start-ups such as Fidelis. 

For Canadian brokers and clients, this helps ensure continued access to innovative, tailored solutions. The ability of the specialty insurance industry to continue to attract non-traditional capital is essential to ensure capacity flows to niche classes of business and complex risks.

Artificial Intelligence, parametric solutions, and geopolitical tensions will continue to evolve, presenting both challenges and opportunities in the near-term. But capital efficiency represents a long-term transformational priority that will quietly influence underwriting appetite, product development, and separate the winners from losers.

For specialty and P&C market participants, understanding and leveraging capital efficiency will be key to thriving in this new environment.

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