Property cat reinsurance softening to continue into April, June and July renewals, says Fitch

With property catastrophe reinsurance rates significantly softening at the January 2026 renewals, rating agency Fitch forecasts that further softening will continue into the April, June, and July renewals later this year.

At the same time, the agency confirmed that it is maintaining its ‘deteriorating’ sector outlook for global reinsurance in 2026, citing moderately weaker operating and business conditions expected over the year.

Fitch adjusted its outlook for the global reinsurance industry to “deteriorating” from “neutral” back in September, with the agency saying at the time that “Softer pricing conditions and rising claims costs will pressure underwriting margins, though profitability remains strong by historical standards.”

Analysts at Fitch recently highlighted how record amounts of reinsurance capital supply from both traditional and alternative sources exceeded the slight demand increase from buyers during the January 1, 2026 renewals, which drove a softening market, but one that analysts feel can still deliver profits.

“Property catastrophe pricing significantly softened at the January 2026 reinsurance renewals following rate reductions at the mid-year 2025 renewals, with reductions in risk-adjusted prices across most lines,” Fitch said.

Rate reductions of up to 5% were observed for US and European catastrophe-exposed portfolios, while for loss-free US property business, pricing declines reached as much as 20%, compared with a range of down 10% to up 10% from the previous year.

Additionally, European property rates also fell by up to 20% for loss-free accounts at the January renewals, versus a range of down 15% to up 5% in 2025.

As mentioned, the rating agency expects to see these softening conditions continue throughout 2026.

“We anticipate softening market conditions to continue at the midyear 2026 renewals in April (Asia-focused) and June/July (Florida). Abundant capacity and rising competition are likely to lead to gradual price erosion across most reinsurance lines and looser policy terms in property lines, barring large loss activity,” Fitch explained.

Fitch also outlined that competitive behaviour remains rational and disciplined, with loss ratios continuing to benefit from favourable claims frequency trends.

Moreover, while severe hurricane-related events and other natural catastrophe losses remain a key source of volatility for P&C insurers, Fitch Ratings believes the sector is well capitalised to withstand large single-event losses.

However, the agency warned that a series of major catastrophic events occurring in quick succession could strain capital positions and result in adverse rating consequences.

“Fitch has a ‘neutral’ fundamental sector outlook for the US property/casualty (P&C) insurance sector in 2026, as well as for both commercial and personal lines. Our ‘deteriorating’ outlook for the global reinsurance sector for 2026 reflects that underlying operational and business conditions are likely to worsen overall for reinsurers globally,” Fitch concluded.