According to a recent report from Jefferies, the reinsurance investor community expects average reinsurance rates for global property catastrophe reinsurance to fall between -15% and -20% at renewal on January 1, which is more pessimistic than the -12% to -15% estimate reported by brokerage firms.
This price drop comes after three years of unusually high interest rates and a fairly mild scenario of natural disasters in 2025, leading to an inevitable price drop to 1.1.
Data from major industry brokers highlighted the scale of the pricing pullback. Guy Carpenter’s online interest rate index fell by 12%, while Gallagher Re reported a 15% drop, the biggest fall since 1999. Similarly, Howden Re estimates that risk-adjusted global property catastrophe treaty business fell -14.7%, the largest decline since 2014.
That decline will accelerate in the second half of 2025; analysts note that as the year progresses, January’s California wildfires remain the only significant loss event, and initial market forecasts of 5% to 10% cuts have steadily been revised downwards as bearish investors have grown.
The report noted that despite downward pressure on pricing, the industry maintained strong buffers due to “excellent” price adequacy built over the past three years.
However, analysts stressed that even with recent cuts, current rates are still about 7% higher than levels before the impact of Hurricane Ian in 2022.
This continued pricing advantage is driving strong profitability across the industry, with market leaders such as Munich Re reporting return on equity (ROE) of approximately 20% between 2023 and 2025.
Profits for the best specialist insurers are even higher, with Beazley taking around 25% (and up to 30%) over the same period.
The same is true for the broader industry, with Aon’s representative sample of 22 companies showing average ROE rising from mid-single digits to about 16% between 2023 and 2025.