JP Morgan, the US-based global investment bank and financial services company, expects double-digit price declines in property catastrophe reinsurance to persist into 2027, as strong industry profitability, relatively low natural catastrophe losses and an influx of capital continue to put pressure on rates.
The reinsurance market, and notably property and property cat lines, have been experiencing softer pricing conditions for some time, but 2026 marked an acceleration in the pace of reductions.
Following a period of exceptionally high rates in 2023 and 2024 after the so-called reset, pricing has moved progressively lower, with more substantial decreases recorded across the latest renewal periods.
JP Morgan cited figures from reinsurance broker Marsh Re, formerly known as Guy Carpenter, showing that average reinsurance prices declined by approximately 12% at the January 2026 renewals. The downward trend continued into the mid-year renewal period, with global property catastrophe rates falling by 16% at the July 2026 renewals.
The investment bank anticipates additional pricing pressure at the January 2027 renewals, particularly within property catastrophe lines, where it expects double-digit decreases to continue. JP Morgan attributed this outlook to several factors, including the sector’s sustained strong returns on equity (ROE), relatively benign catastrophe experience during 2026 to date and the availability of new sources of capital.
JP Morgan noted that reinsurers have recorded particularly favourable financial results since 2023, with average ROEs remaining in the high teens. The bank compared this performance with the period following Hurricane Katrina, when increased property catastrophe rates and elevated interest rates supported similarly strong industry returns.
However, the investment bank cautioned that extended periods of consistently high profitability have been relatively uncommon in the reinsurance industry. Historically, fluctuations in catastrophe losses have contributed to greater volatility in earnings than has been observed in recent years, suggesting that the current level of profitability may become harder to sustain.
JP Morgan also indicated that the financial consequences of declining reinsurance rates are beginning to emerge, particularly in underwriting performance, despite the sector’s continued resilience in the near term.
The bank pointed to Munich Re as one of the first major reinsurers to demonstrate the effects of weaker pricing on its combined ratio expectations during 2026. At the beginning of the year, Munich Re’s normalised combined ratio was expected to stand at 80%, but this had deteriorated to approximately 82% by the second quarter.
While other reinsurers have so far experienced a more limited impact, JP Morgan believes the broader industry will find it increasingly difficult to offset continued rate reductions. The bank therefore expects underwriting margins to face growing pressure over the next two years as lower pricing gradually affects financial performance.
