Reinsurance rates to fall as profits, capital grow: Guy Carpenter

Reinsurance buyers will see lower prices at year-end renewals as the sector’s capital supply continues to outstrip demand, executives at reinsurance broker Guy Carpenter & Co. said Wednesday.

Reinsurers reported profitable results in 2023 and 2024 and are forecast to do so again in 2025, putting further pressure on rates, they said during a briefing ahead of next week’s annual reinsurance conference in Monte Carlo, Monaco.

“The reinsurance industry is clearly and increasingly in a buyer’s market. We see an acceleration of the softening trends witnessed over the past two years,” said Laurent Rousseau, London-based CEO of EMEA and global capital solutions at Guy Carpenter.

Depending on catastrophe losses and the geopolitical environment, pricing declines, which averaged about 7% in North America during the first half of 2025, will likely accelerate and terms and conditions will broaden, he said.

Reinsurance capital continues to increase on the back of strong underwriting results, retained earnings and higher investment yields, Mr. Rousseau said.

While demand for coverage is increasing, it lags supply in part because insurers are retaining more risk to fuel their earnings growth, he said.

Global reinsurance capital stands at about $650 billion in 2025, up from $607 billion in 2024 and $568 billion in 2023, according to Guy Carpenter.

The industry’s combined ratio was below 90% in 2023 and 2024 and is expected to remain below 90% through 2027, said Jay Dhru, global head of business intelligence.

Since 2023, reinsurers’ return on equity has exceeded the sector’s cost of equity, he said.

“Reinsurers made up for the underperformance of the sector during the five-year period of 2017 to 2022 in just two years,” Mr. Dhru said.