Global credit rating agency AM Best has revised its outlook for the worldwide reinsurance sector from “Positive” to “Stable”, citing a combination of accelerated declines in property reinsurance pricing and persistent challenges in the United States casualty segment as key factors.
According to AM Best’s Best’s Market Segment Report, reinsurance premium rates for the January 1, 2026 renewals fell by 10–20%, with the steepest reductions observed in accounts that had previously experienced no significant losses. Dan Hofmeister, Associate Director at AM Best, commented:
“These declines have brought pricing back close to pre-2023 renewal levels, a period prior to market-wide volatility when risk-adjusted pricing had surged and terms and conditions were considerably stricter.”
The downward pressure on property reinsurance pricing poses a potential challenge for maintaining the relatively stable operating performance observed over the past three years. In 2025, global catastrophe-related insurance losses exceeded $100 billion, exerting a substantial impact on the reinsurance market.
Major Contributors to 2025 Reinsurance Losses
| Event | Details |
|---|---|
| Large loss events | California wildfires (Q1, 2025) |
| Other losses | No significant multiple loss events reported |
| Reinsurance response | High attachment levels from primary insurers; portfolio restructuring by reinsurers |
| Return forecast | Expected returns for 2025 anticipated to exceed capital costs |
Greg Dickerson, Director at AM Best, highlighted that the sector’s consistent strong results have created opportunities for significant capital inflows. For 2026, global reinsurance capital is projected at approximately $540 billion in traditional reinsurance and $120 billion in insurance-linked securities.
Life and Non-Life Reinsurance Outlook
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Non-life reinsurance: Outlook revised from Positive to Stable, reflecting the price softening in property lines.
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Life reinsurance: Outlook remains Stable, supported by a concentration of highly rated and well-capitalised insurers.
AM Best noted that, despite some easing of conditions, high retention levels persist, demonstrating ongoing disciplined underwriting practices. Analysts interpret the revised stable outlook as a reassuring signal for the reinsurance market, suggesting a measured balance between risk and return amid evolving market dynamics.
With reinsurers adapting to softening prices while maintaining disciplined underwriting, the sector appears poised for steady performance, even as global catastrophe exposures remain elevated.