The global reinsurance market continues to operate from a position of financial strength as it moves into 2026, according to insights from Artex Risk.
The market is supported by abundant capital and disciplined underwriting practices that have allowed the sector to absorb significant catastrophe losses without disruption to major renewal dates.
Dedicated global reinsurance capital reached US$805 billion at the end of the second quarter, buoyed by strong investment and underwriting performance. Traditional reinsurance capital is projected to grow approximately 8% throughout 2025, sustaining conditions favorable to insurance and reinsurance buyers seeking coverage.
Catastrophe losses totaled US$84 billion in the first half of 2025, driven primarily by US weather and climate-related events including California wildfires and Atlantic hurricane activity. The year's losses reflect the increasing severity of individual peril events, with severe convective storms particularly costly.
SCS losses reached US$42 billion through September 2025, averaging over US$1 billion per event and running 31% higher than the previous decade's average per-event costs. According to Artex Risk, reinsurers' strong balance sheets and excess capital enabled them to absorb early-year losses without causing major disruption to the July 1 property treaty renewals.
The year demonstrated uneven loss patterns across quarters. While the first half was marked by elevated losses, third quarter catastrophe losses hit a nine-year low at approximately US$15 billion as tropical cyclone activity remained mild in the Atlantic and Pacific, bringing year-to-date insured losses through the first nine months to US$105 billion.
Property continues to represent the more attractive underwriting segment for reinsurers compared with casualty business. Reinsurers achieved risk-adjusted rate reductions on many property treaties, although pricing remains closely tied to individual cedant loss history. Some carriers have also resumed offering aggregate property covers on a selective basis following market conditions that rewarded careful risk assessment.
Florida's June 1 renewal cycle demonstrated the effect of 2023 tort reforms implemented in the state. Reinsurers regarded the legal changes positively after Hurricane Milton provided opportunity to test how updated liability protections would perform in actual catastrophe scenarios.
Artex Risk analysis indicates that such structural changes in underlying insurance markets continue to influence reinsurance pricing and terms across specific geographies and lines of business.
Casualty capacity remains steady across the reinsurance market, though underwriters have adopted a cautious approach to new business development. Reinsurers are favoring cedants that can document improvements in underlying portfolio performance and loss trends.
Across the casualty spectrum, reinsurers continue to tighten contract language, raise attachment points, and apply selective underwriting criteria, reflecting ongoing concerns about loss severity trends and pressure from social inflation.
Insurance-linked securities issuance exceeded US$18 billion by the end of the third quarter, with the outstanding ILS market valued at US$56 billion. According to Artex Risk, alternative capital sources have deepened their presence alongside traditional reinsurance channels, reflecting sustained investor interest in risk transfer mechanisms.
Sidecars have expanded to cover both property and casualty risks, with casualty-focused sidecars now representing approximately 8% of the total sidecar market. Investors, particularly private credit funds, have shown increased appetite for these structures due to the combination of underwriting returns and asset management income that they generate.
Property catastrophe risk continues to dominate insurance-linked securities investment activity, yet insurance-linked securities have maintained strong returns with low correlation to traditional asset classes despite broader financial market volatility.
