The reinsurance investor community were bracing for average reinsurance rates for Global Property Catastrophe Reinsurance to drop between -15% and -20% at the January 1st renewals, a more pessimistic result to the estimated -12% to -15% reported by broking groups, according to a recent report by Jefferies.
This downturn in pricing follows a three-year period of exceptional rate highs and a fairly benign 2025 for natural catastrophes, which led to the inevitable fall of prices at 1.1.
Data from major industry brokers underscores the scale of this pricing retreat. Guy Carpenter’s Rate-on-Line index recorded a 12% drop, while Gallagher Re reported a 15% cut – the largest since 1999. Similarly, Howden Re estimates that risk-adjusted global property catastrophe treaty business fell -14.7%, the largest decline since 2014.
These declines accelerated through the later half of 2025; as the year progressed with the Californian wildfires in January remaining the only major loss event, initial market projections of 5% to 10% cuts were steadily revised downward by increasing bearish investors, note analysts.
Despite the downward pressure on pricing, the industry maintains a strong buffer due to the “excellent” price adequacy established over the previous three years, the report noted.
However, even with the recent cuts, analysts highlight that current rates remain approximately 7% higher than 2022 levels, prior to the impact of hurricane Ian.
This sustained pricing strength has fuelled robust profitability across the sector, with market leaders like Munich Re reporting a return on equity (ROE) of roughly 20% between 2023 and 2025.
The highest quality specialty insurers have been even more profitable, with Beazley earning around 25% over the same period (with a high of 30%).
The same is true of the wider industry, as shown by Aon’s representative sample of 22 companies, where the average ROE was risen from mid single digits, to approximately 16% over the 2023-2025 period.
