AM Best Revises Global Reinsurance Outlook to Stable from Positive

AM Best has revised its outlook for the global reinsurance segment to stable from positive, citing accelerating reductions in property reinsurance pricing and ongoing challenges in the US casualty space as being among the key considerations behind the revision. 

In a new Best's Market Segment Report, the rating agency notes that while there has been some loosening of terms and conditions, higher retentions imposed on ceding companies in recent years have largely held. Best suggested that those persistent higher retentions are a favorable indication of reinsurers' sustained underwriting discipline, despite declines in rates for property exposures. 

Best said that revising the outlook for the global reinsurance segment to stable largely reflects increased pressure to reduce property reinsurance pricing, which might challenge the segment's ability to sustain the strong operating performance it achieved over the past 3 years. The rating agency also noted that 2025 represented the sixth consecutive year during which insured global catastrophe losses topped $100 billion. 

Aside from the year's California wildfires, 2025 saw an absence of higher magnitude individual loss events, Best said. The global reinsurance segment has also benefited over the past 3 years from higher attachment levels for the reinsurance coverage purchased by primary market insurers and a strategic rebalancing of reinsurers' portfolios, the rating agency said. "As a result, the reinsurance segment's operating performance for 2025 is expected to generate returns that exceed its cost of capital for a third consecutive year," Greg Dickerson, director at AM Best, said in a statement. 

Best said that the global reinsurance segment's sustained period of strong results has led to robust capital generation, with reinsurers now searching for opportunities to deploy capacity. Reinsurance capacity was expected to reach record levels coming into 2026, approaching $540 billion in traditional dedicated reinsurance capital and $120 billion in insurance-linked securities capital, according to Best. 

The Best report said that January 1, 2026, reinsurance renewals saw rate decreases of 10 percent to 20 percent, with the largest decreases coming on non-loss impacted accounts. "These declines brought pricing closer to pre-2023 renewal levels, when severe market dislocation led to dramatically improved risk-adjusted pricing and stricter terms and conditions," Dan Hofmeister, associate director at AM Best, said in the statement. "At the time, that included an industry-wide retrenchment away from lower layers of property catastrophe reinsurance programs." 

Separately, AM Best revised its individual market segment outlook for the global non-life reinsurance segment to stable from positive, while the rating agency is maintaining its stable outlook for the global life reinsurance segment.