Global reinsurers are expected to see profitability decline in 2026, though earnings will remain at sound levels, according to Fitch Ratings. The ratings agency said Jan. 1 contract renewals confirmed further reductions in risk-adjusted prices across most lines.
Fitch has maintained a "deteriorating" sector outlook for global reinsurance, citing moderately weaker operating and business conditions this year.
The agency said record-high capital supply from traditional and alternative sources again outpaced incremental demand from cedants at the Jan. 1 renewals. This shifted pricing power toward buyers, most notably in property and, to a lesser extent, in specialty lines.
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Aon estimates global reinsurer capital reached a record US$760 billion at Sept. 30, 2025, up US$45 billion from the prior-year period, driven mainly by retained earnings. Gallagher Re projected total dedicated reinsurance capital to reach US$838 billion by year-end 2025, with traditional capital growing 8% to US$710 billion and alternative capital growing 12% to US$128 billion.
Read more: Cedants secure double-digit rate cuts as reinsurance capital hits record high
Casualty pricing remained more balanced, according to Fitch. The agency attributed softer property pricing to reinsurers' moderate catastrophe loss experience, a quiet Atlantic hurricane season and losses from the California wildfires remaining within rating sensitivities.
Overall pricing has reverted broadly to 2022 levels but remains above the 2018 trough. Property catastrophe and retrocession rates fell by 10%-20% on loss-free placements.
Specialty lines saw modest decreases, with cyber rates down 15%-25% and aviation only marginally higher. US casualty renewals were broadly stable, while international casualty declined by high single digits.
Fitch noted that heightened pricing competition has been accompanied by easing terms and conditions from the standards set in 2023. Reinsurers are more willing to provide protection at lower attachment points and for more frequent return periods, including for aggregate treaties.
The agency expects combined ratios and return on equity to deteriorate slightly in 2026, assuming major losses stay within budgets.
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