S&P Global Ratings expects most reinsurers to remain well within their annual natural catastrophe budgets and deliver solid results for full-year 2025, noting that the sector is on track to exceed its cost of capital for the third consecutive year (2023–2025) and into 2026.
In its Global Reinsurance Sector View 2026, S&P said it maintains a stable sector view of global reinsurance, underpinned by robust capital positions, resilient underwriting margins, strong investment income, and earnings expected to stay above reinsurers’ cost of capital in 2026.
This assessment also reflects the ratings agency’s view of credit trends, sector-wide risks, and emerging risks over the next 12 months.
S&P noted that the January 1st, 2026, reinsurance renewals saw broad pricing declines, notably in property and property‐catastrophe (short‐tail) lines and, to a lesser extent, in casualty.
The market entered the renewal season with substantial excess capacity, with global reinsurance capital reaching a record $760 billion as of September 30th, 2025, and expected to rise further by year-end driven by strong operating earnings.
A quiet 2025 U.S. hurricane season, combined with growing appetite from third‐party capital providers for insurance risk, reinforced a highly competitive environment at 1.1.
“Excess short‐tail capacity shifted negotiating leverage to buyers, resulting in 10%-20% rate declines at the Jan. 1 renewals. Attachment points remained high and largely unchanged, reflecting the structural shifts since early 2023, while pressure on terms and conditions allowed cedants to regain some coverage,” said S&P.
Despite the devastating California wildfires at the start of 2025, overall natural catastrophe losses borne by the reinsurance sector for the full year were below the 10-year average, with the primary market again absorbing the bulk of elevated secondary-peril activity.
However, S&P stressed that ongoing softening in market conditions presents increasing risks and will likely reduce margins for the reinsurance sector, particularly amid global natural catastrophe losses consistently exceeding $100 billion annually and continued pressure in U.S. casualty lines.
