AM Best expects another strong year of operating profitability for the reinsurance sector in 2025, supported by a relatively benign third quarter for catastrophe activity, while emphasising that reinsurers must maintain discipline at the upcoming January 1st renewals, where rates are expected to soften.
“We expect some softening at the upcoming 1/1, which we will watch very closely,” said Le Cam. “Maintaining discipline is a key element underpinning our positive outlook.”
He underscored the importance of the reinsurance segment maintaining underwriting discipline, allowing reinsurers to preserve strong margins, noting that this is what AM Best has observed so far in 2025.
Le Cam added, “The shift we observed in 2023, with reinsurers moving from providing frequency protection to providing protection to the capital of their cedents, is something we expect to persist.
“The results have been strong, and we would expect another strong year of operating profitability for 2025, where catastrophe activity in Q3 has been relatively benign.”
He concluded that demand for reinsurance remains strong and that the segment is well-capitalised, estimating that dedicated reinsurance capital should reach around $650 billion in 2025.
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