Global reinsurers’ profitability will decline but remain strong in 2026, as 1 January contract renewals confirmed further reductions in risk-adjusted prices across most lines, according to Fitch Ratings.
The global credit rating agency said, “This aligns with our ‘deteriorating’ sector outlook for global reinsurance, reflecting moderately weaker, but still sound, operating and business conditions in 2026.”
Record-high capital supply from traditional and alternative sources again outpaced incremental demand from cedants on 1 January. This shifted pricing power towards buyers, most notably in property and, to a lesser extent, in specialty, while casualty remains more balanced. Reinsurers’ moderate property catastrophe loss experience supported softer pricing. This was driven by a quiet Atlantic hurricane season, losses from the California wildfires remaining within rating sensitivities, and lower reinsured loss share than in prior years.
Pricing
Overall pricing has reverted broadly to 2022 levels and remains well above the 2018 trough. Property catastrophe and retrocession rates fell by 10%-20% on loss-free placements. Specialty had modest decreases, although cyber was down by 15%-25% and aviation was only marginally higher. US casualty renewals were broadly stable, while international casualty declined by high single digits.
Heightened pricing competition has been accompanied by terms and conditions beginning to ease from the very high standards set in 2023. Reinsurers are more willing to provide protection at lower attachment points and for more frequent return periods, while coverage has expanded moderately. Competition is likely to remain price-driven in 2026, but Fitch expects policy terms to loosen further at forthcoming renewals, absent a major macro or sector-specific shock.
Combined losses
Fitch expects combined ratios and return on equity to deteriorate slightly in 2026, assuming major losses stay within budgets, driven by lower pricing and rising loss costs. This will be mitigated by preserved pricing adequacy, still-tight terms relative to historical norms, and supportive investment returns.
Revenue growth will slow as prices and volumes fall, with reinsurers prioritising diversification and profitability over expansion and, in some cases, being unable to deploy capital as planned. Global data centre construction and cyber risk, as well as structured solutions, are key growth areas in 2026 and beyond. M