Monday, 6th April 2026
Khabor Wala Desk
Published: 31st December 2025, 11:59 AM
Ahead of the January 1, 2026 renewals, London’s reinsurance market is exhibiting a notable softening across multiple business lines, with premium rates declining significantly. According to a recent report by Guy Carpenter, this trend is being driven by expanded capital, historically low catastrophe losses, and sustained high returns for reinsurers.
The report characterises the current market as “softening,” attributing the trend to abundant capital availability, a prolonged period of low natural catastrophe losses, and consistently robust profits for reinsurers.
Guy Carpenter’s analysis indicates that reinsurers are poised to deliver strong returns once again in 2025. Key market indicators are summarised below:
| Indicator | 2023 | 2024 | 2025 (Projected) |
|---|---|---|---|
| Return on Equity (ROE) | 21.9% | 16.4% | 17.6% |
| Reinsurance Capital Growth | 7% | 7% | 9% |
| Natural Catastrophe Losses (US$ bn) | 150 | 148 | 121 |
| Catastrophe Premium Change (ROL) | ↓ | ↓ | Double-digit ↓ |
The projected ROE for 2025 is 17.6%, significantly above the average cost of capital of 8.6%, signalling strong performance for a third consecutive year. Capital is expected to grow by 9% in 2025, following 7% increases in each of the previous two years. This expansion has been supported by underwriting profits, retained earnings, asset recoveries, and investor interest in alternative capital solutions such as catastrophe bonds.
Property: Demand for natural catastrophe coverage has risen by 5–10%, met through traditional and alternative solutions including aggregate quota share, catastrophe bonds, and parametric products.
Cyber: Focus is increasing on hybrid and event-specific contracts, with non-proportional coverage premiums dropping by 2.5–25%.
Casualty: Regional renewals show mixed outcomes. Premiums remain broadly stable, though some portfolios within proportional structures benefit. In the United States, casualty positions have been traded alongside property portfolios.
Investor interest in insurance-linked securities (ILS) is further contributing to premium reductions in property lines. In 2025, total property and cyber catastrophe bond issuances exceeded $58 billion, including 15 first-time sponsors entering the market.
According to Guy Carpenter, the combination of excess capital, profitable underwriting, and disciplined cedent behaviour is expected to maintain the softening trend in the reinsurance market. These factors are likely to support both market stability and sustainability through 2026.
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