Despite extensive loss activity in Q1, Guy Carpenter anticipates strong reinsurer performance to continue for the rest of 2025, with capital growth of 5% to 7% by year-end.

Despite global economic volatility and insured losses nearing $70 billion through H1 of 2025, the reinsurance renewal trends observed at January 1 have continued, according to Marsh McLennan’s global risk and reinsurance specialist.

These trends include strong reinsurer balance sheets fuelling a sustained appetite for growth, an abundance of excess property capacity contributing to moderating pricing, disciplined underwriting practices in the casualty sector, and a continued focus by reinsurers on fostering holistic client relationships to expand their portfolios.

Reinsurer returns on equity were reportedly 16% in 2024 and are projected to be 15% in 2025, while reinsurance capital closed 2024 at an all-time high of $607 billion. Guy Carpenter anticipates a continuation of this trend, with capital growth of 5% to 7% by year-end 2025.

Dean Klisura, President and CEO, Guy Carpenter, commented, “The current trading environment is one of the most favourable for reinsurers in many years, evidenced by the additional capital being attracted to the sector.

“We see this as a tremendous opportunity to rebalance the market dynamics in our clients’ favour. More capacity will continue to moderate pricing, give clients more diversification of reinsurance partners, and provide better solutions to protect earnings.”

Discussing the casualty reinsurance market at the Spring 2025 renewals, Guy Carpenter observed continued discipline, with two factors driving more stable outcomes.

“First, reinsurers and clients evaluated trading relationships across property, casualty, and specialty programs. Reinsurers looked to find balanced support across all programs for a given client.

“Second, carrier underwriting actions have improved casualty economics for reinsurers, particularly proportional programs where insurers share ground-up premium and loss.

Guy Carpenter concluded, “As a result, through mid-year renewals, ceding commissions on proportional placements generally renewed flat to slightly down following 18-24 months of reductions. Excess of loss placements continued to face rate pressure as loss severity drives more volatility for reinsurers – generally rates increased 10-20%, although each renewal was highly customised based on the individual portfolio.”