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Reinsurance industry seen normalizing as returns cool
BCG said reinsurance average annual total shareholder returns were 19.1% over five years through 2025, but one-year TSR dropped from 29.0% in 2024 to 14.0% in 2025.
Boston Consulting Group analysts said the reinsurance industry is moving away from an exceptionally strong period as pricing improves earlier in the cycle and balance sheet growth slows. In its 2026 Insurance Value Creators Report, BCG said average annual total shareholder returns over the five years through 2025 were 19.1%, but one-year TSR fell sharply from 29.0% in 2024 to 14.0% in 2025, still above the 10-year average.
The report also argued that reinsurance remains a long term value creator, citing an average annual TSR of 13.4% over the ten years from 2016 through 2025. In a changing risk market, BCG said reinsurers will need to lean more on underwriting discipline, capital allocation, operating efficiency, portfolio flexibility, and earnings quality rather than on favorable pricing conditions that have supported recent results.
BCG said performance will depend on whether reinsurers can deliver value accretive growth as pricing pressure increases. It highlighted priorities it wants reinsurance CEOs to focus on over the next three to five years, including dynamically allocating capital across products and geographies, demonstrating earnings quality and sustainability, pursuing growth only where risk adjusted returns justify it, and returning capital when deployment opportunities are insufficient.
The report added that the next few years will test the ability to allocate capital effectively rather than simply deploy more of it, noting that reinsurance underwriting typically operates with relatively thin margins and substantial capital requirements. BCG’s P and C reinsurance benchmarking for 2021 to 2025 cited an average 16% return on tangible equity, including roughly 7 percentage points from underwriting and 9 percentage points from investment returns.