Global credit rating agency AM Best has revised its outlook for the worldwide reinsurance sector from “Positive” to “Stable”, citing accelerated reductions in property reinsurance pricing and persistent challenges in the US casualty segment as key factors influencing the change.
In its latest Best’s Market Segment Report, AM Best noted that at the January 1, 2026 renewal, reinsurance rates fell by 10–20%, with the most pronounced declines observed in accounts that had previously avoided major losses. The adjustment marks a return to levels last seen before 2023, when market volatility had driven risk-adjusted pricing significantly higher and terms were markedly stricter.
“These reductions have brought pricing closer to pre-2023 renewal levels, reflecting the market’s adaptation following a period of heightened instability,” commented Dan Hofmeister, Associate Director at AM Best.
The report identifies rising pressure on property reinsurance pricing as a primary concern, potentially challenging reinsurers’ ability to sustain strong operating performance in the coming years. The year 2025, in particular, saw global catastrophic insurance losses exceed $100 billion for the sixth consecutive year, underscoring the persistent volatility in the sector.
Key Catastrophic Loss Contributors – 2025
| Event Type | Description |
|---|---|
| Major loss event | California wildfires (Q1, 2025) |
| Other loss conditions | No significant separate large losses recorded |
| Reinsurance effectiveness | High attachment levels in primary insurers and portfolio rebalancing by reinsurers supported market stability |
| Return expectations | Returns for 2025 expected to exceed capital costs |
AM Best further noted that the consistent strong performance has generated substantial capital growth opportunities within the reinsurance sector. Projections indicate that in 2026, global reinsurance capital could reach approximately $540 billion in traditional reinsurance and an additional $120 billion in insurance-linked securities.
Life and Non-Life Reinsurance Outlooks
Non-Life (Property & Casualty) Reinsurance: Outlook adjusted from Positive to Stable.
Life Reinsurance: Outlook remains Stable, with concentration in a small number of highly rated and well-capitalised insurers.
Despite some observed loosening in terms and conditions, AM Best emphasised that high retention levels persist across portfolios, demonstrating continued discipline in underwriting.
“The global reinsurance sector remains resilient, supported by capital adequacy and disciplined underwriting, but pricing pressures will require careful navigation in 2026,” concluded Greg Dickerson, Director at AM Best.
The report suggests that while the sector’s fundamentals remain solid, insurers and reinsurers alike must carefully monitor rate adequacy, catastrophe exposure, and capital deployment to maintain stable long-term performance.