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AM Best keeps Stable outlook for global non-life reinsurance
AM Best projects traditional reinsurance capital of about $575 billion plus $130 billion in third-party capital, targeting record levels by the end of 2026.
AM Best has maintained a Stable outlook for the global non-life reinsurance segment, saying it remains fundamentally strong even as the industry moves past the peak of the hard property market, according to Reinsurance News. The rating agency pointed to supportive operating conditions despite clear softening in property pricing, along with robust nominal and risk-adjusted capital positions backed by prudent capital management. It also cited solid underwriting performance in property catastrophe coverage, even as competitive pressure increases, with reinsurers benefiting from generally favorable terms and conditions and higher attachment points.
AM Best further noted that elevated interest rates continue to boost investment income, creating an earnings tailwind for the segment. On capital, it projected that reinsurance capital is set to reach record levels by the end of 2026, with approximately $575 billion in traditional reinsurance capital supplemented by $130 billion in third-party capital.
Still, the firm said pricing erosion in property and property catastrophe lines has been driven primarily by an imbalance of abundant capacity, partially offset by growth in reinsurance demand. It also flagged potential headwinds from continued softening in pricing, easing terms and conditions, and signs around the re-emergence of aggregate covers, while saying it has not observed significantly lower retentions so far.