Boston Consulting Group (BCG) analysts have said the reinsurance industry is normalising after an “exceptionally strong period” of improving pricing, robust returns, and rapid balance-sheet growth, in its new 2026 Insurance Value Creators Report.
Over the five years through 2025, reinsurance generated average annual total shareholder returns (TSR) of 19.1%, but one-year TSR fell sharply from 29% in 2024 to 14% in 2025, albeit still above the 10-year average. The report also affirmed that reinsurance remains a strong long-term value creator, generating an average annual TSR of 13.4% over the ten years from 2016 through 2025.
In an evolving risk market, reinsurers will depend more on underwriting discipline, capital allocation, operating efficiency, portfolio flexibility, and earnings quality than on the favourable pricing environment of recent years.
The report also emphasised the importance of risk selection, capital allocation, operating efficiency, and portfolio flexibility. “In this environment, success is not measured in premium growth, but value-accretive growth,” said BCG analysts.
The five priorities highlighted by this year’s report that reinsurance “CEOs” should focus on over the next three to five years to remain attractive to investors are, maintaining underwriting discipline as pricing normalises; allocating capital dynamically across products, geographies, and different forms of capital; demonstrating the quality and sustainability of earnings, not simply headline returns; pursuing growth where risk-adjusted returns justify it, rather than growing simply to meet a premium target; and returning capital when attractive deployment opportunities are insufficient.
The report added, “The next few years will not test who can deploy the most capital. They will test who can allocate it most effectively. In a market where capacity is abundant and pricing is under pressure, sometimes the most value-creating decision is to say no.”
BCG’s report explained that shareholder value ultimately comes from three levers: “growth in tangible book value, changes in the price-to-tangible-book-value multiple, and cash-flow contribution to shareholders, including dividends and changes in share count.”
The analysts then explain that as attractive underwriting opportunities become scarcer, the balance between these three levers is particularly important. This matters because reinsurance underwriting operates on relatively thin margins and with substantial capital requirements.
BCG’s P&C reinsurance analysis shows that, “For 2021–2025, our P&C reinsurance benchmarking analysis indicates an average 16% return on tangible equity (RoTE), comprising approximately 7 percentage points from underwriting and 9 percentage points from investment returns. The underlying economics include an average 66% loss ratio and 28% expense ratio—equivalent to a 94% combined ratio. There isn’t unlimited underwriting margin available to absorb price deterioration. A relatively small change in pricing or loss experience can therefore have a disproportionate effect on underwriting returns.”
The report’s long-term shareholder-return analysis provides some evidence of the importance of those capabilities. Munich Re, Arch Capital, and Hannover Re stand out in our ten-year analysis for combining relatively high average annual TSR with comparatively low volatility of annual shareholder returns, although the five-year analysis shows a more varied competitive picture.
