Property and casualty reinsurance net premiums written declined 6% to $73.73 bn in the first half of 2026, although underwriting profitability improved significantly as catastrophe losses fell, according to Fitch Ratings.
The 18 non-life reinsurers tracked by the agency reported a combined ratio of 86.1%, compared with 92.7% in the first half of 2025. Net income return on equity increased to 18.2%.
- P&C reinsurance net premiums written declined 6% to $73.73 bn in 1H 2026.
- The group’s combined ratio improved to 86.1% from 92.7% a year earlier, while net income return on equity reached 18.2%.
- Fitch expects further reinsurance pricing declines at January 2027 renewals as record traditional and alternative capital continues to exceed modest demand growth.
Lower catastrophe losses accounted for much of the underwriting improvement. Catastrophe events added 3.5 percentage points to the combined ratio, down from 10.9 percentage points a year earlier.
Global reinsurance market conditions remain difficult as abundant capacity and strong competition pressure pricing across most lines, according to Fitch Ratings. Non-life underwriting results improved sharply in the first half of the year.
Global reinsurance rates are declining in many segments, while policy terms and conditions have become less restrictive. Fitch still expects reinsurers to generate favorable returns during 2026.
Fitch warned that softer pricing and more flexible reinsurance terms could erode underwriting margins during the remainder of 2026 and into 2027.
Reinsurance profitability improves as catastrophe losses decline
The reduction in catastrophe losses supported stronger underwriting results despite lower net premiums written. The catastrophe loss contribution to the combined ratio declined by 7.4 percentage points year over year.
Fitch’s monitored reinsurers consequently reported improved underwriting profitability and higher returns on equity. The agency nevertheless expects underlying underwriting performance to deteriorate as competitive pressure increases.
Lower reinsurance pricing could put pressure on margins and overall returns through the second half of 2026 and into 2027.
Property catastrophe reinsurance rates expected to fall in 2027
Fitch expects further pricing reductions at the January 2027 reinsurance renewals, accompanied by increasing flexibility in terms and conditions.
Fitch expects property catastrophe rates to continue to soften in 2027, absent a large-scale hurricane or other loss events. Property reinsurance rate declines reached double-digit percentages during the mid-year 2026 reinsurance renewals.
Global reinsurance demand at the mid-year renewals increased by more than 10%, according to Aon. Terms and conditions loosened marginally, although retentions and attachment points remained largely unchanged.
Aon attributed the increase to a wider range of products from reinsurers and greater demand for coverage at the upper layers of US programs.
Demand outside the US was broadly stable as most insurers maintained existing net retentions. Reinsurer appetite continued to increase across regions, with Florida recording what Aon described as one of its most favorable renewal periods in a decade.
Insurers in Latin America and Australia/New Zealand also faced fewer capacity constraints. Reinsurers offered sufficient capacity across most placements as competition for business increased.
Global reinsurer capital rose by $5 bn to a record $790 bn at March 31, 2026. Continued expansion of third-party capital accounted for most of the increase, according to Aon.
The mid-year renewals also brought greater use of customized reinsurance structures. Reinsurers showed more willingness to offer aggregate covers and products designed to protect insurers against earnings volatility.
The agency expects competitive conditions to persist as available reinsurance capacity continues to exceed demand growth.
Record reinsurance capital increases pricing pressure
Fitch identified record industry capital and modest growth in reinsurance demand as the principal factors behind the supply-demand imbalance.
Traditional reinsurance capacity has been supplemented by record levels of alternative capital. Investor participation has increased particularly through catastrophe bonds, alongside other structures such as reinsurance sidecars.
The additional capacity has intensified competition among reinsurers and contributed to lower property catastrophe pricing.
Fitch expects continued expansion of the alternative reinsurance capital market into 2027. “Fitch expects strong alternative reinsurance capital market growth and attractive risk-adjusted returns into 2027, with investor supply and sponsor demand well balanced,” the agency said.
Global reinsurance capital reached $800 bn in 2026 as expanding capacity, lower property pricing and stronger catastrophe bond activity favor buyers, Aon stated.
The expansion reflects strong underwriting profitability, retained earnings and continued investment in insurance-linked securities (ILS). Third-party capital increased to $144.5 bn, with catastrophe bonds and reinsurance sidecars accounting for much of the growth.
Aon expects favorable conditions for reinsurance buyers across several business lines, particularly property catastrophe, where competition has already produced double-digit pricing reductions and more flexible contractual terms.
The outlook points to continued pricing pressure on traditional reinsurers, with future underwriting profitability increasingly dependent on loss experience and the ability to maintain adequate pricing as market conditions soften.
