The price is falling in global property reinsurance.

Global credit rating agency AM Best has revised its outlook for the worldwide reinsurance sector from ‘Positive’ to ‘Stable’, highlighting an acceleration in property reinsurance rate reductions and ongoing challenges in the US casualty market as pivotal factors influencing its decision.

In its latest “Best’s Market Segment Report”, AM Best notes that the 1 January 2026 renewal period saw reinsurance rates fall by 10–20%, with the sharpest declines recorded on non-loss impacted accounts. The agency emphasised that these reductions bring pricing back in line with pre-2023 levels, a period before severe market dislocation had driven risk-adjusted pricing upwards and imposed stricter terms and conditions.

“These declines brought pricing closer to pre-2023 renewal levels, when severe market dislocation led to dramatically improved risk-adjusted pricing and stricter terms and conditions,” said Dan Hofmeister, Associate Director at AM Best. “At the time, the industry retrenched from lower layers of property catastrophe reinsurance programmes.”

The adjustment to a ‘Stable’ outlook reflects the increasing pressure to reduce property reinsurance pricing, which could constrain the sector’s ability to sustain the very strong operating performance recorded over the past three years. Notably, 2025 marked the sixth consecutive year in which insured global catastrophe losses exceeded $100 billion, with the California wildfires in early 2025 being the primary high-impact event.

Despite these challenges, the segment has benefited from higher attachment levels on reinsurance coverage purchased by primary insurers and strategic portfolio rebalancing by reinsurers. Greg Dickerson, Director at AM Best, noted:

“As a result, the reinsurance segment’s operating performance for 2025 is expected to generate returns exceeding its cost of capital for the third consecutive year.”

Robust capital accumulation from sustained profitability has left reinsurers actively seeking deployment opportunities. Reinsurance capacity is projected to enter 2026 at record levels, including approximately $540 billion in traditional reinsurance capital and $120 billion in insurance-linked securities (ILS) capital, further strengthened by three consecutive years of strong earnings.

AM Best also observed that, while some loosening of terms and conditions has occurred, higher retentions imposed on ceding companies in recent years have largely remained, reflecting sustained underwriting discipline despite declining property rates.

Key Market Data: Global Reinsurance Segment (2025–2026)

Life vs Non-Life Reinsurance Outlooks
Separately, AM Best revised the outlook for the global non-life reinsurance segment from ‘Positive’ to ‘Stable’, while maintaining the global life reinsurance segment outlook at ‘Stable’. The life reinsurance market remains highly concentrated among a handful of well-capitalised, highly rated insurers with strong liquidity and robust risk-adjusted capital.

Overall, while the reinsurance sector faces pressures on pricing and exposure to catastrophe risk, AM Best underscores that disciplined underwriting, strategic portfolio adjustments, and strong capital reserves provide a stabilising foundation for continued sector resilience.