Source: insurancebusinessmag.com

Global reinsurers are expected to see a decline in underwriting results heading into 2026, according to a new report from Fitch Ratings. While pricing across the sector is likely to remain sufficient to support positive returns, profitability is projected to come under pressure.

Fitch reported that non-life reinsurers experienced reduced underwriting profitability in the first half of 2025 compared to the same period in 2024. The 19 reinsurers tracked by Fitch posted a reinsurance combined ratio of 92.7% for the first half of 2025, up from 88.3% in the first half of 2024. The increase was largely attributed to losses from wildfires in California.

Net premiums for non-life reinsurance fell slightly in the first half of 2025 compared to the previous year. Fitch attributed this decline to softening market conditions, which have contributed to lower premium volumes across the sector.

Reinsurance market in the first half of 2025

Global property and casualty reinsurers reported a combined net income of US$12 billion for the first half of 2025, slightly below the US$12.5 billion recorded in the same period last year. The average combined ratio for this group rose to 87.6% from 83.7% in the first half of 2024, reflecting the impact of significant natural catastrophe losses.

Despite these challenges, the sector’s largest players, including Munich Re, Swiss Re, Hannover Re, and SCOR, achieved a record average return on equity of 21.1% in the first half of 2025, highlighting the resilience of the industry’s largest firms.

Catastrophe bond issuance also reached record levels in the first half of 2025, with alternative capital and new sponsors entering the market. This influx has provided insurers and reinsurers with additional risk transfer options, broadening investor participation and contributing to capacity growth.

In its report, Morningstar DBRS noted that climate risk remains the most significant challenge for global reinsurers, as insured natural catastrophe losses continue to rise, with Gallagher Re estimating global insured catastrophe losses at $82 billion in the first half of 2025, the highest for any first half in the past decade.

On the life and health side, reinsurers tracked by Fitch reported a 15% increase in pre-tax income for the first half of 2025. This improvement comes as mortality trends begin to normalize following the COVID-19 pandemic. However, premium revenue for life and health reinsurance decreased during the same period compared to the first half of 2024.

Fitch’s outlook suggests that while reinsurers face headwinds from catastrophe losses and shifting market dynamics, the sector is positioned to weather these challenges. The agency expects that continued discipline in pricing and risk selection will be key for reinsurers as they navigate the remainder of 2025 and move into 2026.