Expanded reinsurance capacity resulted in accelerated softening of pricing across many lines during the January 1, 2026 renewals, according to a report issued by Guy Carpenter, the reinsurance business of Marsh.
Carpenter described a “softening market shaped by capital growth, one of the lowest reinsured catastrophe losses in past 10 years, and strong reinsurer returns.”
Reinsurers expected to achieve another year of strong returns in 2025, at a 17.6% return on equity, following 16.4% in 2024 and 21.9% in 2023, said the broker’s “January 1, 2026 Reinsurance Renewal Report.”
“Reinsurers’ returns are expected to comfortably exceed their cost of equity for the third year in a row, by an average 8.6 percentage points…,” Carpenter said, predicting this trend will likely continue into 2026 and 2027.
Dedicated reinsurance capital is expected to increase another 9% in 2025, after 7% increases in both 2023 and 2024, Carpenter added.
“Despite global trade tensions and increased regulatory scrutiny, reinsurers have grown capital due largely to strong retained earnings,” commented Dean Klisura, president and CEO, Guy Carpenter, in a statement accompanying the report. “This has allowed clients to benefit from lower prices and a wider range of innovative solutions to meet their rapidly evolving needs.”
Guy Carpenter attributed the sector’s capital growth to strong underwriting profits, retained earnings, recovering asset values, and robust investor interest, particularly in alternative capital and catastrophe bonds.
Lower Catastrophe Losses
Insured catastrophe losses are estimated to be $121 billion in 2025, 18% below the five-year inflation-adjusted average, due to a benign US wind season, the broker said.
Carpenter noted that “reinsurers continue to benefit from high attachment points, demonstrated by reinsurers’ lower share of catastrophe loss. This factor, along with abundant capacity, are driving competitive pricing conditions, with catastrophe rate-on-line (ROL) down double digits globally.”
Excess capital positions, profitable underwriting results, and property reinsurance rates all drove reinsurers’ appetite for growth, Carpenter continued.
For property catastrophe placements, cedents were able to achieve double-digit risk-adjusted rate reductions for non-loss affected programs. In addition, reinsurance buyers sought better risk sharing, such as aggregate and catastrophe quota shares.
Property catastrophe demand increased 5-10%, depending on the region and segment of the market, the report said, explaining that half of increased demand was for traditional capacity, while the other half of additional demand was for aggregate products, catastrophe quota shares or alternative solutions, such as catastrophe bonds or parametric products.