Strong Reinsurance Results Draw Capital, Support Market Growth

Guy Carpenter reported that strong reinsurer performance and returns are attracting additional capital to the sector. Despite global economic volatility and insured losses approaching $70 billion through the first half of 2025, reinsurer balance sheets remain solid, supporting continued growth and moderating pricing, according to the firm.

Insured loss activity, which was elevated in the first quarter, eased in the second quarter. Losses for the first half of 2025 are now in line with the inflation-adjusted 5-year average. The Los Angeles wildfires accounted for $40 billion, or 59 percent, of insured losses during this period. These losses are not expected to affect reinsurer capital or market appetite for the remainder of 2025, Guy Carpenter said.

Reinsurer returns on equity reached 16 percent in 2024 and are projected at 15 percent for 2025, Guy Carpenter reported. Reinsurance capital ended 2024 at a record $607 billion, with an additional 5 to 7 percent growth forecast by year-end 2025. Dean Klisura, president and CEO, Guy Carpenter, said, "The current trading environment is one of the most favorable for reinsurers in many years, evidenced by the additional capital being attracted to the sector. More capacity will continue to moderate pricing, give clients more diversification of reinsurance partners, and provide better solutions to protect earnings."

Property catastrophe demand rose 5 to 7 percent, while reinsurer capacity exceeded demand by more than 20 percent. Risk-adjusted rate changes included decreases of 5 to 15 percent for non-loss impacted programs and increases of 10 to 20 percent for loss-impacted programs, the company said.

Guy Carpenter highlighted expanded use of advanced artificial intelligence and data science to analyze property contract coverage, benchmark contracts, and enhance consistency in the market. In addition, approximately $17 billion in limit was placed through 56 property catastrophe bonds and 1 health catastrophe bond during the first half of 2025.

Casualty reinsurance remained disciplined, with reinsurers seeking balanced support across property, casualty, and specialty programs, according to Guy Carpenter. Underwriting actions improved casualty economics, particularly in proportional programs, where ceding commissions generally renewed flat to slightly down after earlier reductions. Excess of loss placements faced rate increases of 10 to 20 percent, with terms customized by portfolio, the firm reported.