Reinsurance pricing continued to soften at the June and July 2025 renewals, reinforcing Fitch Ratings’ outlook that increasing capacity and intensified competition will drive prices down further after the 2024 peak.
Most reinsurance segments saw gradual rate declines, in line with trends observed at the January and April renewals.
Property programmes without losses dropped by 10%–15%. US casualty pricing remained stable. Retrocession terms improved. Specialty lines showed mixed trends: cyber pricing continued to fall, while aviation held steady.
The financial impact of lower pricing since mid-2024 is now more visible. Underwriting margins are narrowing, driven by sustained rate erosion and increased claims severity, particularly from natural catastrophes like the Los Angeles wildfires in 1H2025.
Though pricing remains above long-term averages, the shift is weighing on profitability. Investment income continues to support earnings.
Reserve adequacy across the sector remains strong, giving reinsurers flexibility to manage earnings through favourable developments. However, some liability lines may face pressure from prolonged social inflation effects.
The market remains well-capitalized. Supply of reinsurance continues to grow faster than demand, shifting pricing power to cedants, especially in property lines. In casualty, pricing leverage is more balanced. Competitive activity largely focuses on rates, not contract structure.
Despite this, property reinsurance revenues are rising, supported by higher insured values and stronger risk awareness. Appetite for US casualty business varies, with some players expanding exposure and others retreating.
Terms and conditions are showing early signs of softening. Reinsurers are increasingly open to covering lower layers in programmes, offering protection at reduced attachment points and for shorter return periods.
Aggregate and working-layer covers are returning. Negotiations around T&Cs are more common as underwriting discipline begins to ease. Heightened competition is driving this trend, though the shift remains gradual.
