AM Best’s outlook for the global reinsurance segment is no longer positive, the rating agency announced Monday, citing the uptick in property reinsurance price drops and concerns about casualty reinsurance loss trends.

The outlook is now stable, AM Best said in a market segment report, noting that high retentions that property reinsurers have required in recent years are still in place through Jan. 1, 2026.

Property reinsurance pricing, on the other hand, fell by double-digits, with rates down between 10 and 20%. Non-loss impacted accounts saw the steepest rate declines, the report said, also noting that some terms and conditions (outside of retentions) were loosened at 1/1—some policy wordings broadened and some exclusions narrowed.

The rate declines “brought pricing closer to pre-2023 renewal levels, when severe market dislocation led to dramatically improved risk-adjusted pricing and stricter terms and conditions,” said Dan Hofmeister, associate director, AM Best, in a media statement. “At the time, that included an industry-wide retrenchment away from lower layers of property- catastrophe reinsurance programs.”

AM Best said the revision of the outlook to stable primarily hinges on the increasing pressure for reinsurers to reduce property reinsurance pricing. That may challenge the global reinsurance segment’s ability to sustain the very strong operating performance achieved over the past three years, the report said.

AM Best stressed, however, that “property exposures are still being priced at levels that suggest technical adequacy on average.”

Also, even though global insured catastrophe losses exceeded $100 billion for the sixth straight year in 2025, the reinsurance segment’s 2025 returns are expected to exceed the segment’s cost of capital for a third consecutive year, Best said, attributing the good result to the higher attachment points of the past three years.

“The sustained period of strong results has led to robust capital generation that has reinsurers searching for opportunities to deploy capacity,” the report says, putting reinsurance capacity at record levels—roughly $540 billion in traditional dedicated reinsurance capital and another $120 billion of ILS capital.

Reinsurers’ returns are also still being bolstered by high interest rates of past years earning through their investment portfolios even though future interest rates levels are uncertain.

Since “most non-life portfolios [are] concentrated in the three- to five-year duration range, reinsurers are positioned to earn relatively elevated levels of interest income for several more years, providing a durable tailwind even if headline rates begin to drift lower,” AM Best said.

On the casualty reinsurance front, AM Best points to the familiar challenges of social inflation, which prompted several reinsurers to strengthen casualty reserves in 2024 and 2025—a trend that AM Best expects to continue in 2026.

“In some cases, unfavorable loss reserve development in long-tail lines has been partially or entirely offset by favorable development from property, specialty, and workers compensation reserve releases, although the buffer derived from potential excess reserve positions in other lines may be diminishing,” the AM Best report says.

The rating agency made note of rate hikes and reduced limits in volatile lines, adding, however, that “systemic risks nevertheless remain unresolved.”

“Whether the meaningful pricing gains seen for the past several years are keeping pace with loss cost trends is questionable,” the report says, identifying casualty insurance and reinsurance business as a “fragile area of opportunity, balancing investor appetite for diversification against mounting volatility.”