Expanding reinsurance capacity has accelerated the softening of pricing across multiple lines of business during the January 1, 2026 renewals, according to a report by Guy Carpenter, the reinsurance arm of Marsh.
The report characterised the current market as “softening,” driven by capital growth, one of the lowest reinsured catastrophe loss years in the past decade, and continued strong reinsurer returns.
Reinsurers are projected to achieve another year of robust returns in 2025, with a 17.6% return on equity, following 16.4% in 2024 and 21.9% in 2023. Guy Carpenter highlighted that returns are comfortably exceeding the cost of equity by an average of 8.6 percentage points for the third consecutive year, a trend expected to continue through 2026 and 2027.
Dedicated reinsurance capital is anticipated to increase 9% in 2025, building on 7% growth in both 2023 and 2024. This growth is attributed to strong underwriting profits, retained earnings, recovering asset values, and sustained investor interest, particularly in alternative capital and catastrophe bonds.
Catastrophe Losses Remain Low
Insured catastrophe losses in 2025 are estimated at $121 billion, 18% below the five-year inflation-adjusted average, reflecting a relatively benign US wind season. High attachment points and abundant capacity have driven competitive pricing, with catastrophe rate-on-line (ROL) declining in double digits globally.
| Metric | 2023 | 2024 | 2025 (Est.) |
|---|---|---|---|
| Return on Equity | 21.9% | 16.4% | 17.6% |
| Reinsurance Capital Growth | 7% | 7% | 9% |
| Insured Catastrophe Losses (US$ bn) | 150 | 148 | 121 |
| Catastrophe ROL Change | ↓ | ↓ | ↓ double digits |
Demand for property catastrophe coverage increased 5–10%, evenly split between traditional capacity and alternative solutions such as aggregate quota shares, catastrophe bonds, or parametric products. Cedents leveraged excess capacity to negotiate more favourable renewal terms, driving risk-sharing innovations.
Cyber and Casualty Markets
The cyber insurance market continues evolving toward hybrid and event-specific treaties, with demand for non-proportional coverage rising. Cyber pricing remains under pressure, with non-proportional rates down 2.5–25%, while terms and conditions improve.
Casualty renewals displayed regional variability. Generally stable, they improved for clients with disciplined proportional structures. Notably, casualty positions were traded against property portfolios during this renewal cycle, reflecting strategic portfolio adjustments in response to rising US litigation costs.
Cat Bonds Reach New Heights
Investor appetite for insurance-linked securities (ILS) contributed to softer property market conditions. The total outstanding notional for property and cyber catastrophe bonds surpassed US$58 billion, with 15 first-time sponsors in 2025 alone, reflecting favourable pricing, expanded terms, and attractive investor spreads.
Guy Carpenter concluded that excess capital, profitable underwriting, and disciplined cedent behaviour collectively underpin the continued softening of global reinsurance pricing, reinforcing the sector’s stability and resilience heading into 2026.