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Reinsurers head into H2 2026 with capital strength, pricing pressure
Morningstar DBRS expects property catastrophe rates to stay under pressure ahead of January 2027 renewals, even as the sector can absorb higher loss volatility in H2 2026.
Global property and casualty reinsurers are entering the second half of 2026 in a position of financial strength, but Morningstar DBRS expects underwriting to get more competitive as the year progresses.
The credit ratings agency cited strong earnings, resilient investment returns, disciplined risk selection, and solid capital as key supports. At the same time, it said growing reinsurance capacity and moderating property catastrophe pricing are likely to test underwriting discipline.
Morningstar DBRS expects property catastrophe rates to remain under pressure ahead of the January 2027 renewals if catastrophe losses stay contained. It also said reinsurers should still be able to absorb greater loss volatility in H2 2026, including the possibility of increased catastrophe activity during the Atlantic hurricane season, while noting a strengthening El Niño could reduce the odds of an active season.
Looking ahead, Morningstar DBRS said competitive pressure will make risk selection and portfolio management more important. It added that property underwriting remains highly profitable, while casualty and specialty businesses face a tougher mix of social inflation, reserve uncertainty, cyber pricing pressure, and geopolitical risks, which it expects to steer reinsurers toward business meeting risk-adjusted return requirements rather than growth for its own sake.