Record earnings of $25.2 billion in 2025 are giving way to softer pricing, excess capital, and rising geopolitical risk, setting up a more competitive and volatile reinsurance market in 2026, according to Morningstar DBRS.
Global reinsurance capital reached $735 billion by mid-2025, increasing competition across business lines and driving rate reductions. Property catastrophe reinsurance pricing declined by 10% to 15% at the January 1, 2026 renewals, with further easing expected through the year.
Similar data results point to similar trends. Moody’s Ratings reported that property reinsurance rates fell by up to 20% at the same renewal period, attributing the decline to improved reinsurer profitability and rising alternative capital inflows. The agency maintained a stable outlook for the sector, noting that pricing remains adequate following increases between 2019 and 2023.
Premium growth for reinsurers remained relatively flat in 2025, with rate reductions offsetting selective volume increases. Demand for property reinsurance continues in the US, particularly in Florida and California, though increased competition in these regions may lead to further pricing pressure into 2026–27.
Developments in the Middle East have introduced pricing volatility in marine, aviation, and political risk segments, particularly in war-related coverage, according to Morningstar DBRS. These changes follow a period of relative stability in specialty lines during 2025, when some segments, including marine and energy, had begun to soften.
The repricing linked to geopolitical developments remains concentrated in specific lines, while broader market conditions continue to be influenced by available capacity and underwriting practices.
Reinsurers reported aggregate net income of $25.2 billion in 2025, up from $20.5 billion in 2024, representing a 23% increase year over year. Underwriting results improved, with the average combined ratio declining to 83.9% from 86.1%.
At the company level, Munich Re reported a combined ratio of 73.5%, Swiss Re 79.4%, Hannover Re 84.0%, and SCOR 82.3%. Arch Capital posted 80.8%, while RenaissanceRe reported 87.2%. Everest Re Group recorded 91.7%, and AXIS Capital reported 92.6%.
Bermudan reinsurers recorded a combined ratio of 88.1%, compared with 87.2% in 2024, reflecting exposure to North American catastrophe events and US casualty risks, including California wildfires and Hurricane Melissa.
Industry-wide trends align with broader insurance market developments. Swiss Re Institute reported that the global P&C insurance market has reached $2.4 trillion, doubling in size over the past 20 years, with reinsurers continuing to provide capacity within a multi-layered risk transfer structure.
Investment income totaled $24.2 billion in 2025, supported by higher asset bases and portfolio yields, along with realized and unrealized gains. RenaissanceRe reported a 77% increase in investment income, including $0.5 billion in fixed-income valuation gains and $0.4 billion in gains linked to gold derivative contracts.
Declining interest rates entering 2026 are reducing reinvestment yields. Some reinsurers with shorter-duration portfolios have reported lower portfolio returns, leading to adjustments in asset allocation toward higher-yielding instruments within defined risk limits.
Moody’s noted that reinvestment yields remain above levels seen during the low-rate period, though the benefit is moderating.
Natural catastrophe losses totaled $125 billion in 2025, marking the sixth consecutive year above $100 billion.
Major events included California wildfires, with about $41 billion in insured losses, and Hurricane Melissa, at approximately $2.5 billion. Despite these losses, reinsurers generally remained within catastrophe budgets due to higher attachment points and tighter program structures.
Moody’s noted that insurers are retaining a larger share of secondary peril losses due to higher attachment points in reinsurance programs, which continue to hold at elevated levels.
Casualty reinsurance conditions remain influenced by social inflation and reserving risk, particularly in the US Rates continue to exceed underlying loss trends, though exposure to litigation and higher settlement costs remains.
Moody’s reported that reserves for long-tail lines, including general liability and commercial motor, remain under pressure, with some insurers taking actions such as reserve strengthening, portfolio adjustments, and reinsurance transactions to manage exposures.
Broader industry developments continue to influence reinsurance demand. Swiss Re Institute reported that reinsurance premiums have grown at about 7% CAGR over the past decade, outpacing 4.2% growth in primary P&C premiums, reflecting increased reliance on risk transfer.
Cession rates and retrocession volumes have also increased, supported by demand for catastrophe protection and the role of alternative capital. This layered risk transfer structure links primary insurers, reinsurers, and capital markets, increasing reliance on investor sentiment while supporting capacity.
Profitability is expected to remain positive in 2026, though pressure is building from declining pricing in short-tail lines and lower investment yields. Capital levels continue to exceed available opportunities at current pricing, increasing competition for risks.
Geopolitical developments may continue to affect specific specialty lines, while overall market direction remains influenced by capital availability, pricing trends, and underwriting discipline.
