Join Our SMS List
Retirement

AM Best Reports Shift in Reinsurance Outlook: Return to Pre-2023 Property Pricing

• By gsswpadmin 

<p>According to AM Best's <a href="https://go.ambest.com/e/898351/urchase-asp-record-code-361798/6nxlgj/1115736804/h/YZ8AZkS03ml6lO_vwkT4wsUKO6_sODoJxa9xAZuG3eg" target="_blank" rel="noopener">market segment report</a>, the high retentions that property reinsurers have maintained in recent years will continue through January 1, 2026.</p>

<p>In contrast, property reinsurance pricing has experienced double-digit declines, with rates dropping between 10% and 20%. The steepest declines were observed in non-loss impacted accounts. The report also highlighted that some terms and conditions, aside from retentions, were relaxed at the start of the year—resulting in broader policy wordings and narrowed exclusions.</p>

<p><em>
    <span style="margin-bottom:20px;display:block;"><span style="color: #003366;"><em>“Aggregate/frequency products have re-emerged more plentifully than last year but have not returned broadly to pre-hard-market structures.”</em></span></span>
    <span style="margin-bottom:20px;display:block;"><span style="color: #003300;">***</span></span>
    <span style="margin-bottom:20px;display:block;"><span style="color: #003366;"><em>“Deployment remains highly selective and analytics-driven.”</em></span></span>
    <span style="margin-bottom:20px;display:block;"><strong><em>— AM Best’s “Market Segment Outlook: Global Reinsurance,” published on January 20.</em></strong></span>
    <span style="margin-bottom:20px;display:block;"><em/></span>
</em></p>

<p>Dan Hofmeister, associate director at AM Best, noted that the rate declines have brought pricing closer to pre-2023 renewal levels. This period was marked by significant market dislocation that led to improved risk-adjusted pricing and stricter terms and conditions. At that time, the industry saw a retreat from lower layers of property-catastrophe reinsurance programs.</p>

<p>The stable outlook reflects the increasing pressure on reinsurers to lower property reinsurance pricing, which could challenge the global reinsurance segment's ability to maintain the strong operating performance seen over the past three years. However, AM Best emphasized that property exposures are still being priced at levels indicating technical adequacy on average.</p>

<p>Despite global insured catastrophe losses surpassing $100 billion for the sixth consecutive year in 2025, the reinsurance segment's returns are expected to exceed its cost of capital for a third straight year. This positive outcome is attributed to the higher attachment points established in previous years.</p>

<p>“The sustained period of strong results has led to robust capital generation, prompting reinsurers to seek opportunities to deploy capacity,” the report states. Reinsurance capacity is currently at record levels, with approximately $540 billion in traditional dedicated reinsurance capital and an additional $120 billion in ILS capital.</p>

<p>Reinsurers' returns continue to benefit from high interest rates earned through their investment portfolios, although future interest rate levels remain uncertain. AM Best noted that since most non-life portfolios are concentrated in the three- to five-year duration range, reinsurers are positioned to earn elevated levels of interest income for several more years, providing a durable tailwind even if headline rates begin to decline.</p>

<p>On the casualty reinsurance front, AM Best highlighted ongoing challenges related to social inflation, which led several reinsurers to bolster casualty reserves in 2024 and 2025—a trend expected to persist into 2026. While unfavorable loss reserve developments in long-tail lines have been partially offset by favorable developments in property, specialty, and workers' compensation reserve releases, the buffer from potential excess reserves in other lines may be diminishing.</p>

<p>The rating agency also noted rate hikes and reduced limits in volatile lines, but emphasized that systemic risks remain unresolved. “Whether the meaningful pricing gains seen over the past several years are keeping pace with loss cost trends is questionable,” the report states, identifying casualty insurance and reinsurance as a “fragile area of opportunity,” balancing investor appetite for diversification against increasing volatility.</p>

<p><em><strong>This <a href="https://www.carriermanagement.com/news/2026/01/20/283636.htm" target="_blank" rel="noopener">article first appeared</a> in Insurance Journal’s sister publication, <a href="https://www.carriermanagement.com/" target="_blank" rel="noopener">Carrier Management.</a></strong></em></p>

<p class="tagtag">
    <span class="tagtag">Topics</span>
    <a href="https://www.insurancejournal.com/trends/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">Trends</a>
    <a href="https://www.insurancejournal.com/reinsurance/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">Reinsurance</a>
    <a href="https://www.insurancejournal.com/property/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">Property</a>
    <a href="https://www.insurancejournal.com/company/ambest/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">AM Best</a>
</p>

Interested in Property?

Get automatic alerts for this topic.

<p>According to AM Best's <a href="https://go.ambest.com/e/898351/urchase-asp-record-code-361798/6nxlgj/1115736804/h/YZ8AZkS03ml6lO_vwkT4wsUKO6_sODoJxa9xAZuG3eg" target="_blank" rel="noopener">market segment report</a>, the high retentions that property reinsurers have maintained in recent years will continue through January 1, 2026.</p>

<p>In contrast, property reinsurance pricing has experienced double-digit declines, with rates dropping between 10% and 20%. The steepest declines were observed in non-loss impacted accounts. The report also highlighted that some terms and conditions, aside from retentions, were relaxed at the start of the year—resulting in broader policy wordings and narrowed exclusions.</p>

<p><em>
    <span style="margin-bottom:20px;display:block;"><span style="color: #003366;"><em>“Aggregate/frequency products have re-emerged more plentifully than last year but have not returned broadly to pre-hard-market structures.”</em></span></span>
    <span style="margin-bottom:20px;display:block;"><span style="color: #003300;">***</span></span>
    <span style="margin-bottom:20px;display:block;"><span style="color: #003366;"><em>“Deployment remains highly selective and analytics-driven.”</em></span></span>
    <span style="margin-bottom:20px;display:block;"><strong><em>— AM Best’s “Market Segment Outlook: Global Reinsurance,” published on January 20.</em></strong></span>
    <span style="margin-bottom:20px;display:block;"><em/></span>
</em></p>

<p>Dan Hofmeister, associate director at AM Best, noted that the rate declines have brought pricing closer to pre-2023 renewal levels. This period was marked by significant market dislocation that led to improved risk-adjusted pricing and stricter terms and conditions. At that time, the industry saw a retreat from lower layers of property-catastrophe reinsurance programs.</p>

<p>The stable outlook reflects the increasing pressure on reinsurers to lower property reinsurance pricing, which could challenge the global reinsurance segment's ability to maintain the strong operating performance seen over the past three years. However, AM Best emphasized that property exposures are still being priced at levels indicating technical adequacy on average.</p>

<p>Despite global insured catastrophe losses surpassing $100 billion for the sixth consecutive year in 2025, the reinsurance segment's returns are expected to exceed its cost of capital for a third straight year. This positive outcome is attributed to the higher attachment points established in previous years.</p>

<p>“The sustained period of strong results has led to robust capital generation, prompting reinsurers to seek opportunities to deploy capacity,” the report states. Reinsurance capacity is currently at record levels, with approximately $540 billion in traditional dedicated reinsurance capital and an additional $120 billion in ILS capital.</p>

<p>Reinsurers' returns continue to benefit from high interest rates earned through their investment portfolios, although future interest rate levels remain uncertain. AM Best noted that since most non-life portfolios are concentrated in the three- to five-year duration range, reinsurers are positioned to earn elevated levels of interest income for several more years, providing a durable tailwind even if headline rates begin to decline.</p>

<p>On the casualty reinsurance front, AM Best highlighted ongoing challenges related to social inflation, which led several reinsurers to bolster casualty reserves in 2024 and 2025—a trend expected to persist into 2026. While unfavorable loss reserve developments in long-tail lines have been partially offset by favorable developments in property, specialty, and workers' compensation reserve releases, the buffer from potential excess reserves in other lines may be diminishing.</p>

<p>The rating agency also noted rate hikes and reduced limits in volatile lines, but emphasized that systemic risks remain unresolved. “Whether the meaningful pricing gains seen over the past several years are keeping pace with loss cost trends is questionable,” the report states, identifying casualty insurance and reinsurance as a “fragile area of opportunity,” balancing investor appetite for diversification against increasing volatility.</p>

<p><em><strong>This <a href="https://www.carriermanagement.com/news/2026/01/20/283636.htm" target="_blank" rel="noopener">article first appeared</a> in Insurance Journal’s sister publication, <a href="https://www.carriermanagement.com/" target="_blank" rel="noopener">Carrier Management.</a></strong></em></p>

<p class="tagtag">
    <span class="tagtag">Topics</span>
    <a href="https://www.insurancejournal.com/trends/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">Trends</a>
    <a href="https://www.insurancejournal.com/reinsurance/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">Reinsurance</a>
    <a href="https://www.insurancejournal.com/property/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">Property</a>
    <a href="https://www.insurancejournal.com/company/ambest/" class="btn btn-sm btn-primary tagtag" style="color: #fff; padding: 2px 8px; text-decoration: none; margin: 0 2px;">AM Best</a>
</p>

Interested in Property?

Get automatic alerts for this topic.