Reinsurance Market Cooling as Expanded Capacity Drives Down Prices

A surge in reinsurance capital and robust financial performance has fueled accelerating price declines across markets at January 1 renewals, with property catastrophe reinsurance buyers securing double-digit rate reductions for programs without losses, according to Guy Carpenter.

The reinsurance sector entered 2026 with substantially more capacity to deploy. Dedicated reinsurance capital expanded by 9% in 2025, pushing return on equity to an estimated 17%, while excess capital positions and profitable underwriting continued to fuel reinsurers’ appetite for growth, according to the reinsurance broker’s year-end analysis.

A significant contributor to those returns was the reduced loss impact reinsurers faced relative to their share of catastrophe exposure.

While 2025 insured catastrophe losses reached $121 billion—roughly 18% below the five-year inflation-adjusted average—reinsurers experienced only 11% of these events compared with 20% prior to the market shift in 2023, Guy Carpenter said.

The availability of additional insurance-linked securities capital also pressured reinsurance pricing further. Catastrophe bond offerings hit record levels, with total notional outstanding coverage surpassing $58 billion and including 15 first-time sponsors entering the market in 2025, the report said.

Evolving Risk Structures and Segmented Outcomes

Reinsurance buyers capitalized on favorable conditions by seeking enhanced risk-sharing arrangements beyond traditional structures. Aggregate and catastrophe quota shares gained prominence as clients looked to better align incentives with their reinsurance partners, Guy Carpenter said.

Casualty reinsurance renewals showed more complexity, with outcomes varying significantly based on geographic region, program structure, and portfolio performance. Generally stable with some improvements for disciplined clients, casualty renewals demonstrated that reinsurers continued expecting cedants to support multiple lines of business within treaty agreements, according to the report.

The cyber reinsurance market underwent notable transformation, Guy Carpenter said, shifting from basic quota share and aggregate protections toward specialized designs incorporating specific event triggers, individual risk parameters and hybrid approaches.

Dean Klisura, president and CEO of Guy Carpenter, noted that “despite global trade tensions and increased regulatory scrutiny, reinsurers have grown capital due largely to strong retained earnings,” enabling clients to access both lower prices and a wider array of innovative solutions. &