The global property and casualty (P&C) re/insurance market experienced a shift in the first half of 2025, with Howden Re’s half-year analysis indicating a softening of the hard market as competitive pressures influenced rate adjustments across multiple segments.
Howden Re observed that property catastrophe re/insurance pricing declined by approximately 5% year-over-year, with the reduction concentrated in non-proportional treaties. Proportional treaties continued to see moderate rate increases.
US casualty pricing remained steady, contributing to growth within that segment. The firm noted that insurers are targeting growth opportunities while balancing exposure as pricing stabilizes across several lines.
The re/insurance sector is entering a new phase of favorable conditions, supported by increased deployable capacity and a shift away from the extended period of rate increases.
According to Howden, the January 1 renewals saw risk-adjusted rate reductions in several sectors, with competition fostering more granular approaches to pricing and program differentiation.
Despite the signs of softening, premium volumes increased across most P&C lines. Property catastrophe premiums grew by 15% year-over-year, even as rates declined by 5%. Liability premiums rose by 8%, supported by a 1.9% rate increase.
Financial lines premiums increased by 4%, although rates fell by 7.6%. Non-catastrophe property premiums were up 3%, with a 1.4% rate decrease, and specialty lines premiums rose by 2%, with a slight 0.4% rate rise.
Insurers and reinsurers are increasingly shifting strategy, focusing on exposure-driven growth rather than relying solely on price increases. Howden Re’s analysis highlights that premium growth in liability lines is now outpacing rate changes, and carrier earnings calls have underscored the importance of exposure growth as a driver of top-line expansion.
Natural catastrophe insured losses reached a 10-year high, totaling about US$81 billion in the first half of 2025. The Los Angeles wildfires accounted for US$1.47 billion in insured damages. While the first quarter saw significant losses, the second quarter was quieter, providing some relief to underwriting margins.
Secondary perils, such as wildfires and severe convective storms, have contributed more than US$100 billion in losses annually for five consecutive years. These perils, once considered secondary, are now increasingly viewed as primary risks by the market, and are shaping underwriting and risk management strategies.
Reserve releases continued to bolster earnings across the sector. Net calendar year reserve releases were primarily driven by property, short-tail, and workers’ compensation lines, with an industry average release of approximately 0.84% in the first half of 2025. This reflects improved optimism compared to previous half-year periods.
Howden Re reported that forward profitability remains positive. The industry’s average combined ratio for the first half of 2025 was about 103.8%, with forward projections indicating improvement.
Diversified business models and geographic spread are expected to support ongoing profitability. Catastrophe losses are projected to remain manageable, contributing to stable underwriting margins through the remainder of the year and beyond.
Composite capital levels have risen since fiscal year 2022, supported by strong investment income, robust underwriting results, and share buybacks. Return on equity increased from 9.9% in FY2022 to 17.4% by mid-2025, while dividend payout ratios reached 56.9% at mid-year.
Howden Re anticipates that competition for profitable business will intensify as pricing momentum slows. The firm expects insurers to focus on selective underwriting and capital deployment, with innovation and disciplined risk selection remaining central to sustaining margins.
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