Howden Re has released a new report examining the current state of the reinsurance market, analyzing how the sector is adjusting as rates begin to ease but remain higher than historic levels.
The report notes that the market is transitioning from a period of rate hardening that began in 2022–2023 to what it describes as "hard market softening." While rates are moderating, they remain elevated, and risk premiums are structurally higher.
This shift is occurring from a position of historical pricing strength, which has supported carrier profitability and returns that generally exceed the cost of capital.
Despite improved profitability, cedents are retaining a significant share of natural catastrophe risk, with 62% of all modeled nat-cat exposure held at the start of 2025. The Los Angeles wildfires in January became the largest single loss for reinsurers since 2011, highlighting the market’s delicate balance between risk and capacity.
The 2020s have been marked by a series of interconnected crises, including the effects of the COVID-19 pandemic, geopolitical conflict, cyberattacks, political violence, and heightened natural catastrophe activity. These factors, along with inflation and higher interest rates, have changed the dynamics of profitability and made new capital deployment more challenging.
In the first half of 2025, Howden Re observed a 5% year-over-year decline in property catastrophe reinsurance pricing, with the reduction mainly seen in non-proportional treaties.
Despite this softening, premium volumes in property catastrophe lines climbed 15%, as carriers pursued strategies focused on exposure growth rather than relying solely on price increases.
David Flandro (pictured above, left), head of industry analysis and strategic advisory at Howden Re, said, “We know from history that the current ‘hard market softening’ phase can be profitable for underwriters who innovate as risk selection comes to the fore. This is achieved through superior business intelligence, diversification across geographies and perils, and superior technical execution.”
Howden Re also notes that so-called secondary perils, such as wildfires and severe convective storms, have contributed more than US$100 billion in losses annually for five consecutive years. These risks, once considered secondary, are now viewed as primary by the market and are shaping underwriting and risk management strategies.
Since 2022, approximately US$35 billion in new capital has entered the reinsurance sector, accounting for about 7% of total dedicated capital. Most of this inflow has been concentrated in insurance-linked securities, while the formation of start-ups has been limited, reflecting investor caution and a focus on disciplined capital deployment.
Howden Re’s analysis finds that innovation and adaptability are key to maintaining profitability in the current environment. The report highlights that opportunities are also emerging in cyber, renewables, managing general agents, and growth in emerging markets.
“Howden Re empowers clients by combining deep reinsurance expertise with capital markets access, strategic advisory and our global MGA platform," said Tim Ronda (pictured above, right), CEO of Howden Re. "This breadth allows us to deliver solutions that go beyond traditional broking – enabling clients to unlock new sources of capital and create long-term value.”
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