With record levels of reinsurance capital supply from traditional and alternative sources at renewal on January 1, 2026, outpacing incremental demand from buyers, and with pricing “broadly returning to 2022 levels,” Fitch Ratings analysts expect global reinsurer profitability to decline but remain strong in 2026.
Reinsurance broker reports show that prices for most lines softened further during the key 1.1 reinsurance renewals, with retrocession premium rates down 10%-20% for property catastrophe and no-loss reinsurance, while specialty lines declined slightly, the U.S. casualty market became more stable, and international casualty insurance saw high single-digit declines.
“This is consistent with our ‘worsened’ outlook for the global reinsurance industry, reflecting moderately weaker but still favorable operating and business conditions in 2026,” Fitch Ratings said.
As early as September 2025, Fitch revised the outlook for the global reinsurance industry from “neutral” to “worsened”, saying at the time that competitive conditions would lead to continued market weakness.
For the year ahead, the ratings agency still expects competition to remain price-driven, but importantly, in the absence of major macro or industry-specific shocks, policy terms are expected to be further relaxed in upcoming updates.
The so-called housing market reset in 2023 has pushed rates sharply higher in the catastrophe space, but it will also be important for reinsurers to tighten terms and conditions and waive secondary risk losses and gross coverage to mitigate volatility.
But as Fitch notes, as 1.1 price competition intensifies and terms and conditions begin to relax from 2023 standards, analysts say sellers “prefer protection in the form of lower attachment points and more frequent return terms, including overall treaties, along with slightly expanded coverage.”
Fitch expects reinsurers’ combined ratios and return on equity to decline in 2026 compared with 2025, assuming significant losses are contained within budgets, due to weaker prices and higher loss costs.
“Maintaining pricing adequacy, terms that remain tight relative to historical standards and supportive investment returns will mitigate this,” Fitch added. “Revenue growth will slow as prices and volumes decline, reinsurers prioritize diversification and profitability over expansion and, in some cases, are unable to deploy capital as planned. Global data center construction and cyber risk and structured solutions are key growth areas in 2026 and beyond.”
The Reinsurance Brokers 1.1 Renewal Report also highlighted the industry’s record capital levels, with Fitch saying it expects the industry’s capital to reach a record high by the end of 2025, an increase of approximately 30% from the 2022 low.
Fitch concluded: “The recent expansion of alternative investment managers into Lloyd’s Syndicate and American Casualty has added a new wave of third-party capital. We expect reinsurer capital to remain strong and supportive of ratings, exceeding stated targets and providing sufficient headroom to absorb market shocks.”
