Reinsurance Market Summarized by Guy Carpenter
In the ever-evolving landscape of the reinsurance sector, Guy Carpenter, a global risk and reinsurance specialist, has identified several significant trends for the year 2025.
## Reinsurer Balance Sheets
The robust financial health of reinsurers is a driving force behind their growth appetite. Reinsurers' balance sheets are strong, with capital closing 2024 at an all-time high of $607 billion, and a projected growth of 5% to 7% by year-end 2025[1][2][3]. Despite substantial insured losses, such as the $40 billion in claims from the Los Angeles wildfires, reinsurers' capital is expected to remain resilient, supporting ongoing growth and investment in the sector[2][3].
## Property Capacity
The property sector is witnessing excess capacity, leading to moderating pricing trends. This surplus offers more competitive options for clients[1][3].
## Casualty Underwriting
Casualty underwriting remains disciplined, indicating a focus on maintaining profitability and managing risk effectively. This approach helps reinsurers maintain strong returns despite economic volatility[1][3].
## Client Relationships
Reinsurers are focusing on fostering holistic client relationships to expand their portfolios. This strategy emphasizes building comprehensive partnerships rather than just transactional relationships[1][3].
## Contract Coverage Analysis
The market is experiencing moderating pricing due to excess capacity, especially in property reinsurance. Despite a slight decline in returns on equity (ROE) from 16.4% in 2024 to a projected 15.3% in 2025, reinsurers are expected to maintain robust profitability levels, well above the cost of equity[4].
Furthermore, excess of loss placements continued to face rate pressure during the same period, with each renewal being highly customized based on the individual portfolio. Loss severity drove more volatility for reinsurers, resulting in rates increasing 10-20% for excess of loss placements[1].
In the reinsurance market, ceding commissions on proportional placements renewed flat to slightly down during mid-year renewals. Catastrophe bond market activity has placed approximately $17 billion of limit through 56 property catastrophe bonds and one health catastrophe bond in the first half of 2025[1].
Reinsurers expect the wildfires to not impair capital or appetite for the remainder of the year. Insured loss activity in the second quarter of 2025 levelled off from the elevated first quarter[1].
Data charts for the reinsurance market can be found on Guy Carpenter's Renewal Resource Center. Guy Carpenter predicts that reinsurer balance sheets will drive growth in 2025[2].
[1] Guy Carpenter's Global Reinsurance Overview: Mid-Year 2025 [2] Guy Carpenter's Reinsurance Market Data Charts: 2025 Year-End Projections [3] Guy Carpenter's 2025 Reinsurance Market Outlook [4] Guy Carpenter's Global Reinsurance Overview: Full Year 2024 Results
Reinsurers are increasingly investing their robust financial resources, with capital projected to grow by 5% to 7% by year-end 2025, to support ongoing business and underwriting in various sectors, including events and finance.
In the property sector, excess capacity has caused moderating pricing trends, providing more competitive options for clients, and this investing strategy is facilitated by the resilient capital reinsurers maintain despite substantial insured losses.
