Global Reinsurers Beat Capital Costs for Third Year

Int’l Desk: Global reinsurers delivered returns well above their cost of capital in 2025 for the third year in a row, according to a fresh report from AM Best. Strong underwriting results, driven by earlier portfolio repricing and efforts to reduce risk, helped the sector outperform even as market conditions began to soften.

The report, titled Reinsurers Returns Exceed Cost of Capital Despite Softening Market, found that the median return on equity across the industry reached 16.3% last year. That figure sat only slightly below the record highs seen in 2023.

At the same time, the weighted average cost of capital climbed to 8.23% in 2025 from 7.67% the year before and moved higher still to 8.63% in the first quarter of 2026.

Helen Andersen, an industry analyst at AM Best, noted that reinsurers had kept key programme changes in place. Tighter terms and conditions along with much higher attachment points continued to hold despite the growing availability of capital and capacity that has pushed rates lower this year.

Those structural adjustments, she said, also helped the sector manage the rising frequency and severity of secondary perils.

Most companies posted solid results overall. The cost of equity itself rose for a fourth straight year to 9.6%, which lifted the broader cost of capital even though interest rates had eased.

High levels of capital across the global market have accelerated the softening trend in 2026, yet the discipline maintained on structures and pricing has so far preserved underwriting strength.