Kathmandu. Reinsurance companies globally will deliver returns that exceed their capital costs in 2025. This is the third year in a row that it has recorded a strong performance. This is because portfolio repricing has led to strong underwriting results.
This is according to a new report by AM Best titled ‘Returns for Reinsurance Companies Exceeding Capital Costs Despite Market Softness’. “The weighted average capital cost of the reinsurance industry increased from 7.67 percent in 2024 to 8.23 percent in 2025 and further increased to 8.63 percent in Q1 2026,” the report said.
In addition, high levels of capital and capacity in global markets have fueled the softening trend. Which has intensified this year. According to Helen Anderson, industry analyst at AM Best, the adjustment to program structures has remained strong, with reinsurance companies having tighter terms and conditions and higher attachment points. “These measures have helped reinsurers address the increasing frequency and severity of moderate risks,” she said. ’
Most reinsurance companies have published strong results for 2025. The average return on equity of the companies was 16.3 percent. It was slightly below the record level set in June 2023.
The overall cost of capital increased for the fourth year in a row to 9.6 percent, despite lower interest rates, the report said. –Agency
