Why reinsurers hold steady on catastrophe risk in 2025

But insured losses from natural catastrophes reached $137b in 2024.

Global reinsurers are moderating their appetite for catastrophe risk in 2025 after several years of expansion, according to S&P Global Ratings.

The sector’s exposure to catastrophe risk stabilised at 21% of adjusted capital, the same level as in 2024, as softer pricing conditions limited further growth.

Insured losses from natural catastrophes reached $137b in 2024, well above the long-term industry average. 

However, primary insurers absorbed most of these losses due to high attachment points and repeated US convective storms. 

The top 19 global reinsurers kept catastrophe losses within budget, resulting in another year of strong underwriting margins.

In 2025, reinsurers’ catastrophe budgets remain on track. S&P estimates the industry could withstand annual insured losses exceeding $300b without breaching capital adequacy at the sector level.

Pre-tax profits for the top 19 reinsurers are forecast at around $51b this year, broadly unchanged from 2024. 

The combined buffer of underwriting profits and capital surplus is estimated at $72b, giving the sector resilience even under severe stress scenarios.

Retrocession levels have remained steady, with reinsurers ceding about 50% of exposure to one-in-250-year events. 

Alternative capital continues to play a growing role in providing capacity, particularly in retrocession programs.

Despite headwinds from claims inflation, US casualty losses, climate variability, and market volatility, S&P expects reinsurers to maintain strong capitalisation. 

The property catastrophe book is likely to remain attractive into 2026, though reinsurers are expected to expand cautiously as pricing conditions soften.