In recent years, the global reinsurance industry has performed steadily. Despite natural disasters and investment fluctuations, it still achieved profit growth in 2023 and 2024, exceeding the cost of capital. This success is attributed to the structural adjustment of the market and the favorable pricing environment. Although the issue of casualty loss provisions in the United States remains a potential risk, the industry’s capital adequacy ratio remains strong enough to cope with natural disaster losses and financial market fluctuations in the first quarter of 2025. The conservative investment portfolio has also protected it from the severe impact of the global stock market decline.
S&p Global Ratings data shows that the global reinsurance industry had a capital buffer of approximately 21.5 billion US dollars by the end of 2023, remaining resilient even in the face of extreme market fluctuations. The industry’s asset allocation is highly concentrated in investment-grade fixed-income securities, reducing the impact of interest rate fluctuations. Despite the California wildfires in early 2025 causing insurance losses of up to 50 billion US dollars, reinsurance companies are expected to bear about 20% of the losses, but still retain 60% to 65% of the natural disaster budget, demonstrating their strong risk-absorbing capacity.
Although the industry outlook is stable, inflationary pressure and trade tensions remain potential risks. The inflation rate in the United States is expected to remain at around 3%, which may push up the cost of claims. Furthermore, if global trade frictions continue to escalate, it may exert indirect pressure on the investment portfolios of reinsurance companies. S&p believes that the industry needs to closely monitor the reserve requirement policy and macroeconomic changes to maintain long-term stability.
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