Best’s Market Segment Report: AM Best Revises Global Reinsurance Outlook to Stable from Positive, Notes Accelerated Softening in Property Pricing

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has revised its outlook for the global reinsurance segment to stable from positive, citing an acceleration of reductions in property reinsurance pricing and continuing challenges in the U.S. casualty space as being among its key considerations.

While there has been some loosening in terms and conditions, the newly issued report notes that higher retentions imposed upon ceding companies in recent years have largely held, which AM Best views as a favorable indication of sustained underwriting discipline, despite the declining rates for property exposures.

The revision of the outlook to stable primarily reflects increasing pressure to reduce property reinsurance pricing, which may challenge the global reinsurance segment’s ability to sustain the very strong operating performance achieved over the past three years, according to the Best’s Market Segment Report. The 2025 calendar year also represented the sixth consecutive year of insured global catastrophe losses exceeding $100 billion.

Apart from the California wildfires in the first quarter of 2025, there was an absence of higher magnitude individual loss events last year. Performance in the segment has also benefitted over the past three years from higher attachment levels for reinsurance coverage secured by primary market insurers and a strategic rebalancing of reinsurers’ portfolios. “As a result, the reinsurance segment’s operating performance for 2025 is expected to generate returns that exceed its cost of capital for a third consecutive year,” said Greg Dickerson, director, AM Best.

The sustained period of strong results in the sector has led to robust capital generation that has reinsurers searching for opportunities to deploy capacity. Reinsurance capacity is projected to enter 2026 at record levels: approximately USD 540 billion in traditional dedicated reinsurance capital and USD 120 billion in insurance-linked securities capital, bolstered by a third consecutive year of robust earnings.

According to the report, the Jan. 1, 2026 renewal period included a drop in reinsurance rates between 10 and 20%, with the largest declines occurring on non-loss impacted accounts. “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, AM Best. “At the time, that included an industry-wide retrenchment away from lower layers of property catastrophe reinsurance programs.”

Separately, AM Best has revised its individual market segment outlook for the global non-life reinsurance segment to stable from positive, while its outlook for the global life reinsurance segment is being maintained at stable. The global life reinsurance segment remains highly concentrated among several highly rated, diversified and well-capitalized insurers, which also have strong liquidity and risk-adjusted capital.

To access the full copy of the special report on the global reinsurance segment, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=361798. To view all of Best’s Market Segment Outlooks, including these aforementioned outlooks, please click here.

To view a related video interview with AM Best Senior Director Michael Lagomarsino, please click here.

AM Best will host a briefing with a panel of reinsurance industry executives for a discussion on the evolving global reinsurance landscape, which will also address its global reinsurance outlook. The briefing is scheduled for Thursday, Jan. 22, 2026, at 11:00 a.m. EST. AM Best’s Dickerson will discuss the credit rating agency’s outlook on the global reinsurance segment in light of the January renewals. He will be joined on panel by Aditya Dutt, president, Aeolus Capital Management Ltd. and Renaud Guidee, CEO, AXA XL Reinsurance for additional perspective on the segment. To register for the briefing, click here.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.