Fitch flags 2026 profit easing for global reinsurers

Capital from traditional and alternative sources continues to exceed demand.

Global reinsurers are expected to see profitability ease in 2026 but remain strong, after the January 1 renewals confirmed further declines in risk-adjusted pricing across most lines, Fitch Ratings said. 

This supports Fitch’s “deteriorating” outlook for the sector, reflecting moderately weaker but still sound operating conditions next year.

Fitch said record capital from traditional and alternative sources continues to exceed demand from cedants, shifting pricing power to buyers, especially in property and, to a lesser extent, in specialty lines, whilst casualty remains more balanced. 

Moderate catastrophe losses in 2025, including a quiet Atlantic hurricane season and manageable California wildfire losses, also supported softer pricing.

Overall pricing has broadly returned to 2022 levels and remains well above the 2018 low. 

On loss-free placements, property catastrophe and retrocession rates fell by 10% to 20%. 

Cyber rates dropped by 15% to 25%, aviation was only slightly higher, US casualty was broadly flat, and international casualty declined by high single digits.

Fitch said rising competition is also leading to some easing in policy terms from the very tight conditions seen in 2023, with reinsurers more willing to offer lower attachment points and broader coverage. 

Combined ratios and returns on equity are expected to weaken slightly in 2026 due to lower pricing and higher loss costs, partly offset by still-adequate pricing and supportive investment income.

The sector remains strongly capitalised. Global reinsurance capital is expected to reach a record high at end-2025, about 30% above its 2022 low, supported by retained earnings and growing alternative capital, including catastrophe bonds, sidecars, and new third-party capital in Lloyd’s and US casualty markets.