Kathmandu. The global reinsurance market has maintained strong margins since the January 2023 renewal period and reduced earnings volatility. This has strengthened the positive outlook towards the reinsurance sector.
Global rating agency AM Best said in its report that the capital position of reinsurance companies is strong. “Which is supported by high investment earnings, disciplined capital management and high interest rates from retained income,” the report said.
The absence of significant new entrants in the reinsurance market has helped maintain market discipline compared to the previous cycle. Most global reinsurance companies have maintained strong performance in the first half of 2025.
However, natural disasters related to climate change are estimated to cause more than $100 billion in insured property losses. It is estimated that between $30 billion and $50 billion in damage has been caused by wildfires, especially in California.
“A combination of disciplined underwriting, substantial rates and strong investment earnings, apart from major new season-related events, should provide full-year returns above the cost of capital,” AM Best said in the report. ’
However, the reinsurance sector faces challenges such as climate change, social inflation, geopolitical tensions and trade disputes. “These adverse circumstances reflect the importance of maintaining strict risk management and discipline to ensure that recent market reforms prove sustainable,” AM Best said.
