The global reinsurance segment is at a critical inflection point as reinsurers’ strong earnings since 2023 have driven robust capital generation. With reinsurers’ capital now at record levels, growing competition is increasing pressure on reinsurance pricing, particularly in property lines, and according to a new AM Best report, the key question is whether reinsurers can maintain underwriting discipline or will irrational competition emerge leading to another traditional soft market cycle.
The Best’s Market Segment Report, “Global Reinsurance at an Inflection Point: Can Discipline Survive the Temptation of Record Capital?” starts off AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Other reports, including AM Best’s ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd’s, life/annuity, health and regional reinsurance markets, will be available during August and September.
The global non-life reinsurance segment continues to benefit from strong capitalization, favorable earnings generation and supportive market conditions. However, unlike previous hard markets, capital among these reinsurers has largely accumulated within existing organizations rather than through a wave of new entrants. Many reinsurers now possess multiple opportunities through which capital can be deployed, reducing the need to pursue growth solely through single-channel reinsurance underwriting.
According to the report, casualty reinsurance increasingly represents one of the industry’s most important strategic concerns. Some organizations are capitalizing on casualty growth opportunities, given enhanced rates to bolster overall group premium and revenue, while others have adopted a more-cautious approach given heightened uncertainty surrounding social inflation, litigation funding, larger jury awards and escalating adverse legal environments.
“Casualty exposures often develop over many years, meaning that decisions being made today may not be fully understood until well into the next decade,” said Dan Hofmeister, director, AM Best. “Consequently, maintaining pricing discipline in casualty business may ultimately prove as important as preserving discipline within the property catastrophe market.”
AM Best expects the non-life reinsurance market to maintain favorable earnings profiles barring an outsized catastrophe event. However, a more important question is whether reinsurers can preserve the discipline that produced these profitable results of recent years.
“If underwriting discipline and pricing integrity can be maintained despite record levels of capital, the industry may indeed be in the midst of a meaningful evolution of the reinsurance market. If not, history may once again demonstrate that the fundamental dynamics of supply, demand, and competition remain remarkably persistent,” said Michael Lagomarsino, senior director, AM Best.
Other report takeaways include:
- Reinsurance renewal trends, which marked a decisive turn in January, intensified further at the April and midyear renewals, where US property catastrophe placements, led by Florida, saw reductions widely estimated at 15% to 20%.
- U.S. and Bermuda reinsurers have seen combined ratios improve to the mid-80s to low-90s range under U.S. GAAP from an underwriting loss position in 2020. Reporting on an IFRS 17 basis, the European “Big Four” reinsurers’ combined ratios have followed a similar trend.
- The budding casualty insurance-linked securities market is a relatively small portion of the overall alternative capital market, but investor interest in casualty-linked structures continues to grow. However, the attractiveness of property catastrophe ILS has proven difficult to replicate within casualty business.
- For many of the large global reinsurers, life reinsurance provides relatively stable earnings streams that can help offset volatility elsewhere within the business portfolio.
- AI increasingly appears poised to become a differentiating factor for organizations that successfully integrate technology. The effectiveness of models is often hampered by limited and inconsistent data, while also increasing cyber and systemic risk exposure.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=367297.
For global reinsurance reports ahead of Rendez-Vous de Septembre, as well as video coverage of the event, please visit AM Best’s Reinsurance Information center.
Lastly, AM Best will host its annual reinsurance market briefing at Rendez-Vous de Septembre on Sept. 6, 2026, at 10:15 a.m. (CEST) in Monte Carlo. For more information, please visit the event website.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2026 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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