Property and casualty (P&C) reinsurers are expected to experience “subdued” margins in 2026, a recent report from JPMorgan Chase showed, largely due to price cuts during the January 1 renewal period this year and softer trends in the upcoming mid-year cycle.
There is currently increased capital in the market, driven by two years of strong returns from reinsurers and higher substitution capacity. This surplus is fueling competition and downward pressure on pricing.
In addition, although the Los Angeles wildfires in the first quarter of 2025 boosted reinsurance demand, the event did not substantially change reinsurance pricing trends, but became a tailwind for demand.
This leaves reinsurers still hesitant to lower attachment points in the lower levels of the reinsurance tower or lower prices, according to the Property & Casualty 2026 Reinsurance Outlook report.
Prices for 2025 are approximately 5-15% lower for global/European renewals (January 1, 2025), Japan/Asia renewals (April 1, 2025), and mid-2025 renewals (Florida, Gulf, Bermuda).
JPMorgan Chase said: “We estimate that reinsurance prices will fall by a further 15-20% with renewals on January 1, 2026, and unless catastrophe losses increase, we expect prices to remain soft between April 1 and mid-2026 renewals. Reinsurers have generated strong returns in recent years, but we expect the ROE of this business to compress to close to 10% in 2026 (with higher returns for top underwriters such as ACGL and RNR),” analysts said.
Emphasis: “We believe reinsurance prices are unlikely to turn positive unless the property and casualty industry faces $100 billion or more in insured losses. On the positive side, lower reinsurance prices are positive for major underwriters, most of which have reduced reinsurance coverage as prices soar in 2023.”
JPMorgan expects benign catastrophe losses in the fourth quarter of 2025 to boost performance for reinsurance/insurance underwriters. Analysts predict that the U.S. insurance industry will suffer huge losses of about $5 billion during this period, down from $10 billion in the third quarter of 2025 and $30 billion in the fourth quarter of 2024.
The primary drivers of disaster losses in the United States during this period were severe convective storms, winter storms, and flooding in the Northeast, Midwest, and Mid-Atlantic regions of the country.
“We believe major insurers will absorb a significant portion of losses given higher attachment points and retention rates. Outside the U.S., we expect losses from Hurricane Melissa, Typhoon Koto, Tropical Storm Xenia, Tropical Storm Ditwa, and storms in Europe and the Middle East as well,” analysts said.
Added: “For companies that disclose intra-quarter data, ALL (The Allstate Corporation) and PGR (The Progressive Corporation) reported catastrophe losses in October and November that were lower than our preliminary estimates. ALL reported pre-tax catastrophe losses of $83 million in October and $46 million in November. As a result, we lowered ALL’s 4Q25 catastrophe loss forecast (from $1.3 billion to $300 million).”
PGR reported cat losses of $42 million in October and $41 million in November. JPMorgan lowered PGR’s catastrophe loss assumption to $135 million from $386 million.
Among companies insured by JPMorgan, ALL and TRV (Travelers) are most exposed to U.S. catastrophe risk on one side, while RNR (RenaissanceRe) and ACGL (Arch Capital Group) are the most exposed among reinsurers.
Meanwhile, AIG (American International Group) and CB (Chubb) were most affected by international catastrophe losses.
In recent years, with changes to January 1, 2023 renewal terms/conditions, primary insurers have absorbed a higher proportion of catastrophe losses than historically, while the reverse has been true for reinsurers.
However, analysts note that this trend is now starting to reverse, moving towards pre-2023 patterns.
