Non-life reinsurers tracked by Fitch Ratings posted a combined ratio of 86.1% in the first half of 2026, down sharply from 92.7% in 1H25. Reduced catastrophe losses drove the improvement, with cat contributions falling to 3.5 percentage points from 10.9 percentage points a year earlier. Net income return on equity reached 18.2% in 1H26, up from 17.7% in 1H25, excluding Berkshire Hathaway. Those figures come from Fitch's Global Reinsurance Monitor: Mid-Year 2026.
The improvement comes with a clear forward warning. Fitch expects market pricing to soften further and terms to loosen at the 2027 renewals, as excess reinsurance supply continues to outpace modest demand growth. Returns should remain above the cost of capital, Fitch noted, but will be increasingly dependent on underwriting discipline rather than favourable market conditions.
The 2026 half-year results broadly validate Fitch's view of a sector operating in transition. Exceptional profits since 2023 from hard market underwriting and investment income have driven industry capitalisation to record levels. But those same conditions have attracted abundant new supply, and the market is now competing that advantage away.
The headline combined ratio improvement is largely a product of accident luck. The accident year combined ratio excluding catastrophes rose by 2.3 percentage points to 85.8% in 1H26. Fitch expects that measure to deteriorate a further 1 to 2 percentage points in 2027, as soft pricing works through the loss account.
Global insured natural catastrophe losses reached US$44 billion in 1H26, well below 1H25's US$95 billion, according to Munich Re's NatCatSERVICE data cited by Fitch. The dominant events were US and Canadian winter storms and severe convective storms, with the Atlantic hurricane season quiet through 1H26. Fitch estimated Iran war-related losses at approximately US$3 billion, with marine and political violence lines most affected.
Non-life reinsurance net premiums written fell by 6% in 1H26, as pricing reductions, non-renewals and reduced line sizes outweighed new business. Europe's four largest reinsurers all reported NPW declines, led by Munich Re at 12% in reported currency and Hannover Re at 10%. Fitch expects reinsurance premium revenues to remain constrained in 2027 as reinsurers prioritise profitability over volume.
The softening is not uniform across all lines. Property catastrophe rates fell at double-digit levels at the mid-year 2026 renewals. Casualty rates held or edged higher, but Fitch warned that rate adequacy could be tested in 2027 given persistent social inflation.
Common share repurchases across the tracked group reached US$13.1 billion in 1H26, up from US$4.4 billion in the same period of 2025. The acceleration reflects three years of accumulated profits from the hard market cycle, deployed back to shareholders as organic growth opportunities narrow. Fitch expects active capital management to continue, particularly if the Atlantic hurricane season remains quiet through to year-end 2026.
Life and health reinsurance provided a clear offset to the P&C squeeze. L&H operations tracked by Fitch posted a 12% rise in pre-tax income and a 9.5% increase in net revenue in 1H26. Reinsurance Group of America (RGA) led the L&H group with a 47% income increase, partly from a reinsurance transaction with Equitable Holdings in July 2025.
Insurance-linked securities (ILS) capital reached a record US$141 billion in the first quarter of 2026, according to Aon Securities data cited by Fitch. Catastrophe bond issuance reached US$17.1 billion in 1H26, a first-half record, with total cat bonds outstanding at US$65.8 billion at end-June 2026. Sidecar capital is also growing, with alternative investment managers seeking casualty risk for its yield and diversification from property catastrophe losses.
Reinsurance M&A, dormant through the hard market years, has returned as organic growth slows. Fitch expects the trend to continue into 2027 as companies with record capital seek acquisitions where organic growth has stalled. Completed deals in 1H26 include Sompo Holdings' US$3.5 billion acquisition of Aspen Insurance Holdings and Howard Hughes Holdings' US$2.1 billion purchase of Vantage Group Holdings.
Lloyd's has drawn particular M&A attention, driven by private equity sellers and buyers seeking the market's distribution network, global licences, and strong ratings. The largest pending deal is Zurich Insurance Company's US$10.9 billion agreement to buy Beazley, a Lloyd's-listed specialty reinsurer. Fitch noted that once the deal closes, Hiscox and Lancashire Holdings will be the only remaining Lloyd's-listed carriers and could themselves become acquisition candidates.
Bermuda's seven tracked (re)insurers posted a combined ratio of 85.3% for 1H26 and an ROE of 15.7%, down from 18.6% in full-year 2025. Fitch expects risk-adjusted returns across the sector to remain in the low-teens in 2026 and 2027, above the 8–9% cost of capital. With the underlying combined ratio already rising, premium volumes falling and catastrophe luck unlikely to repeat at 1H26's scale, the margin for error is narrowing.
