Fitch Ratings has shifted the global reinsurance sector outlook to “deteriorating” for 2026 from “neutral” in 2025, indicating expected declines in operational conditions while overall conditions remain favourable for reinsurers. ​

Key factors include abundant capacity and rising competition, leading to gradual price erosion across most reinsurance lines and looser policy terms, particularly in property lines.

Despite these pressures, pricing remains historically high, and resilient investment income supports profitability. ​Strong reserves are still allowing reinsurers to manage their earnings well, while strong capitalisation offers a buffer against unexpected large losses. ​

The report was prepared by Manuel Arrivé, CFA, a director at Fitch Ratings.

He said: “Our sector outlook for global reinsurance has shifted to ‘deteriorating’, reflecting a moderate decline in otherwise sound business conditions.

“Anticipated softer pricing conditions in 2026 and rising loss trends will erode underwriting margins, albeit from strong levels.

“We forecast only a slight decline in 2026 return on equity, moving from the high teens to the mid-teens, a strong level by historical standards.”

Fitch said 85 per cent of rated global reinsurance groups maintained stable outlooks, with 15 per cent showing the potential for future upgrade.

Fitch said the global reinsurance market was enjoying record-high capital levels, with supply outpacing demand, particularly in property and speciality lines. ​

Competition in the market is expected to soften pricing, especially in property catastrophe and non-proportional treaties, unless major loss events occur in late 2025. ​

Under those conditions, reinsurers are likely to adopt more flexible terms, offering lower attachment points and aggregate covers, while underwriting discipline may gradually relax from the high standards set in 2023. ​

Rising claims costs are driven by natural catastrophes and social inflation, with significant insured property catastrophe losses reported in early 2025. ​

Social inflation in the US is projected to rise by 10 per cent to 15 per cent annually, impacting long-term casualty claims through more litigation and jury awards. ​

Economic uncertainties and lower prices may moderate premium growth, particularly in the US and speciality lines linked to economic activity. ​

Combined ratios are expected to slightly worsen in 2026 due to the impact of lower pricing and reduced profitability on new business. ​

US casualty margins may remain flat or decline slightly due to slower price increases not fully offsetting rising claims costs. ​

High reinvestment rates from rising long-term sovereign yields are expected to support investment income, although a shift to declining rates could reduce this benefit.

Reinsurers' capitalisation is anticipated to remain strong, exceeding targets and providing resilience against market shocks. ​

P&C reserve buffers have become stronger, leading to more resilient balance sheets and allowing for smoother earnings profiles, despite some adverse developments in casualty lines. ​

Fitch forecasts net premiums written to remain stable, with slight fluctuations in catastrophe losses and combined ratios.

The net income return on equity is expected to decline slightly, thanks to the anticipated challenges in underwriting margins and pricing pressures. ​

A list of rated reinsurers includes major players like Arch Capital Group, Berkshire Hathaway and Munich Re, with most maintaining stable outlooks. ​