Global reinsurance capacity continues to outpace incremental demand from cedants, shifting pricing power toward buyers, especially in property. In casualty, the balance remains more even.
Competition remains largely price-driven, with terms and conditions (T&Cs) seeing early signs of loosening.
Reinsurers are offering protection at lower attachment points and for more frequent return periods, with working-layer and aggregate reinsurance once again gaining traction.
Negotiations over T&Cs are becoming more common as underwriting discipline relaxes, albeit gradually.
At the June and July renewals, softer pricing reinforced Fitch Ratings’ view that abundant capacity and rising competition will extend downward pressure on rates beyond the 2024 peak.
Rates across most reinsurance segments continued their gradual slide seen at the January and April renewals.
Loss-free property programmes recorded declines of 10%–15%. US casualty pricing held steady, while retrocession saw both improved pricing and coverage. Specialty lines moved unevenly, with cyber still in decline and aviation remaining stable.
The pricing environment is squeezing underwriting margins, compounded by higher claims severity from natural catastrophe events such as the Los Angeles wildfires in 1H2025.
The financial hit from mid-2024’s rate cuts is now evident, with profitability on new business lower. Resilient investment income offsets part of this decline.
Strong reserve adequacy gives reinsurers room to manage earnings by releasing reserves in most lines, though some liability segments remain exposed to adverse reserve development from ongoing social inflation pressures.
Property reinsurance revenue continues to grow on the back of heightened risk awareness among cedants and rising insured values.
Appetite for US casualty cover is mixed, with some reinsurers expanding their positions while others pull back. T&Cs in property lines have loosened slightly as reinsurers seek to secure business in an increasingly competitive environment.
Fitch will update its global reinsurance sector outlook ahead of the Rendez-Vous de Septembre in Monte Carlo. The current outlook stands at “neutral.”
