The Lloyd’s reinsurance segment is facing intensifying softening pressures in 2026, particularly across property catastrophe business, although rates have declined from a very strong peak and are still expected to remain adequate, according to AM Best.
Reinsurance is Lloyd’s largest segment, reportedly accounting for around one-third of the market’s gross written premium.
The segment generated £20 billion of inwards reinsurance premium in 2025, having grown at a five-year compound annual rate of 7% between 2021 and 2025. However, after several years of rate increases, softening emerged in 2025 and intensified in 2026.
During the first half of this year, most reinsurance lines are said to have experienced declines in risk-adjusted pricing, with pressure most pronounced in property catastrophe business, particularly for US-exposed risks, while AM Best also noted pressure on terms and conditions.
Despite the deterioration, the rating agency said rates have moderated from a “very strong peak” and are expected to remain adequate through at least the end of 2026.
However, AM Best noted that Lloyd’s reinsurance segment has historically been volatile due to its exposure to natural catastrophe losses. Against this backdrop, the rating agency said the segment’s profitability in 2026 will depend on catastrophe experience through the remainder of the year, with the hurricane season still ahead.
It also warned that a prolonged crisis in the Middle East could generate further losses for Lloyd’s, which is a key reinsurer in the region and a major provider of marine war-risk cover.
It is worth noting that Lloyd’s continues to attract capital despite the softer market, with an influx of new syndicates and growing deployment of third-party capital.
Its London Bridge risk transformation platform had reached around $3 billion of capital deployment by the end of 2025, with recent transactions including catastrophe bonds and reinsurance captives.
The findings are part of AM Best’s Market Segment Report, “Steering Profitability Remains Crucial for Lloyd’s in a Softening Market,” which forms part of the rating agency’s assessment of the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo.
Stay tuned to Reinsurance News for our full coverage of the event, which you can follow here.
