Design Highlights
- Reinsurance buyers experienced unexpected double-digit rate cuts, with global cat rates decreasing by 12% and European markets seeing a 15% drop.
- The capital growth of dedicated reinsurance reached a record $760 billion, contributing to a competitive and favorable market environment.
- Reinsurers achieved a robust return on equity of around 17% in 2025, motivating them to offer more competitive terms to buyers.
- Increased competition allowed buyers to negotiate significant discounts, especially for aggregate covers and catastrophe quota shares.
- Casualty reinsurance markets remained favorable, providing ample options for buyers seeking to safeguard earnings amidst a resilient US tort environment.
In a surprising twist for reinsurance buyers, the January 1, 2026 renewals brought some welcome news: rate cuts were the name of the game. It’s almost hard to believe, right? But the global cat rate-on-line index dropped by an impressive 12%, with European markets feeling the pinch even deeper at a 15% decline. Meanwhile, US preferred risks basked in double-digit reductions. It was a rate-cutting bonanza, as Europe and Latin America joined the party with similar trends, and Asia Pacific accounts, free from losses, enjoyed reductions nearing 20%. Who knew that 2026 would be this generous?
Capital growth fueled this softening market. By the end of 2025, dedicated reinsurance capital soared a staggering 9%, hitting a record $760 billion. That’s a $45 billion increase, all from retained earnings. Global reinsurer capital has reached a record level, supporting the competitive environment.
Capital growth ignited a softening market, with reinsurance capital reaching a record $760 billion by the end of 2025.
With reinsurers flaunting a robust return on equity of around 17% for 2025, it’s clear they weren’t just sitting on their hands. They were keen to play ball. Insured catastrophe losses totaled $121 billion, which was 18% below the five-year average. That’s enough to make any reinsurer smile.
But let’s talk about the real game-changer: competition. A relatively calm Atlantic hurricane season in 2025 opened the floodgates for enthusiastic competitors. Reinsurers were feeling generous, offering significant discounts and improved terms, especially for loss-free programs. Buyers were in the driver’s seat, pushing hard for aggregate covers and catastrophe quota shares.
The intensity of competition was palpable, far more than in the previous year. Who doesn’t love a good discount?
Casualty reinsurance conditions were equally favorable. Increased capacity and an appetite from reinsurers meant buyers had options. Even the challenging US tort environment couldn’t dampen the mood—insurers were holding strong. The increase in dedicated reinsurance capital could add a whopping $5 billion to the reinsurance premium pool. Broker perspectives echoed this optimism. Guy Carpenter noted the accelerated softening, while Aon pointed to record capital and benign hurricane activity as positive dynamics.
SCOR managed to grow while maintaining stable pricing, showcasing the delicate balance reinsurers are trying to strike. As the market shifts, buyers appear comfortable with their protection levels.
They’re exploring earnings safeguards, even amidst slight competitiveness. The demand for coverage remains robust. With opportunities for profitable growth on the horizon, 2026 is shaping up to be a year of unexpected wins for reinsurance buyers. Just as primary insurers recognize that comprehensive policies can avoid unexpected gaps in protection, reinsurers understand the value of thorough coverage strategies. Who knew the market could be this generous?
