Global property and casualty (P&C) reinsurers reported a combined net income of US$12 billion for the first half of 2025, according to Morningstar DBRS.
This figure is slightly below the US$12.5 billion recorded in the same period last year. The average combined ratio for the group rose to 87.6% from 83.7% in H1 2024, reflecting the impact of significant natural catastrophe losses, particularly from California wildfires and severe thunderstorms in the United States.
The four largest European reinsurers – Munich Re, Swiss Re, Hannover Re, and SCOR – achieved a record average return on equity (ROE) of 21.1% in H1 2025, surpassing previous highs and highlighting the sector’s resilience. This performance was achieved despite the challenging catastrophe environment, with underwriting results remaining solid and capital adequacy well above target ranges.
Morningstar DBRS noted that insured catastrophe losses in the first half of 2025 reached a decade high, despite a relatively quiet second quarter. Investment income continued to support reinsurers' earnings, offsetting some of the underwriting pressure.
The agency said that reinsurers' future performance may become more differentiated, depending on pricing discipline and risk selection, especially as macroeconomic conditions and investment yields fluctuate.
The property catastrophe segment remains a key area for reinsurance business, with strong demand and conservative terms. However, overall P&C underwriting revenue growth slowed in H1 2025 due to rate softening.
Reinsurance pricing at the June 2025 renewals declined by about 10% on a risk-adjusted basis, marking a shift from previous widespread rate hikes. This change reflects increased competition among capacity providers, with upper layers of reinsurance towers seeing average rate reductions in the high single digits, while lower layers experienced either flat rates or modest decreases.
In specialty lines, market conditions are generally stable, but some softening is apparent, especially in cyber risk, where capacity has grown rapidly. Morningstar DBRS reported that while primary casualty rates have increased, high ceding commissions and ongoing social inflation continue to challenge profitability in that segment.
Catastrophe bond issuance also reached record levels in the first half of 2025, with alternative capital and new sponsors entering the market. This influx has provided insurers and reinsurers with additional risk transfer options, broadening investor participation and contributing to capacity growth.
Morningstar DBRS highlighted that climate risk remains the most significant challenge for global reinsurers, as insured natural catastrophe losses continue to rise. Gallagher Re estimates that global insured catastrophe losses reached $82 billion in H1 2025, the highest for any first half in the past decade.
In response, reinsurers have implemented tighter terms and higher attachment points to mitigate the impact of frequent mid-size events. The risk of further losses remains, with ongoing wildfire activity in Europe and an above-average hurricane season forecast for the remainder of the year.
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