S&P expects reinsurer ROE to fall to 10-13 percent in 2027 from 19.1 percent in 2025, while AM Best finds Latin American reinsurance still growing despite facultative price cuts of 5-20 percent. Discipline, not volume, is the differentiator.
S&P: returns normalise, reserves stay in focus
S&P Global’s 2026 Reinsurance Sector View, reported on 4 September, keeps a stable outlook but forecasts return on equity of 12-15 percent for 2026 and 10-13 percent for 2027, against 19.1 percent in 2025. The combined ratio is expected to worsen by roughly 2-4 points, and S&P expects 2027 rate cuts to match those of 2026 even if losses land at budget. With dedicated capital near $688 billion at mid-year, casualty reserve volatility is described as unresolved.
On the buyer side, Moody’s annual survey found 86 percent of respondents expect property reinsurance prices to fall in 2027, up from 74 percent a year earlier, with 7.5-15 percent the most likely range (Artemis, 16 September). KBW, after the Rendez-Vous de Septembre, reported most executives expect property-cat XoL declines of at least 10 percent.
AM Best: Latin America grows, but protection gaps and local competition shift
AM Best’s September 2026 market segment report says the Latin American reinsurance market keeps growing despite a prolonged soft cycle, with facultative pricing down 5-20 percent in some areas. Less than 24 percent of almost $21 billion in economic losses was insured, and penetration remains below 5 percent of GDP. In Brazil, domestic reinsurers grew net premiums 5.6 percent and surplus 13 percent, posting their first positive underwriting result since 2019; local reinsurers took 53 percent of ceded premium at end-2025 versus about 70 percent in 2015-2018.
Distribution is consolidating alongside. On 3 September Oneglobal Broking acquired Panama-based LATAM Reinsurance Brokers (founded 2008), adding facultative, marine, aviation and P&C capability in Central America (Reinsurance News). Meanwhile Howden Re reported LatAm property-cat XoL rates down 15-20 percent at 1 July, with ceding commissions up a further 2-3 points.
What it means for Power Re
A softening cycle is when rating analysts look hardest at reserving, retrocession quality and underwriting authority. For Power Re, whose specialist focus is Group Life & Personal Accident in Latin America, the relevant lesson is that a short-tail, data-rich, mortality- and accident-driven book is less exposed to the property-cat price erosion and casualty reserve uncertainty now worrying S&P. That advantage holds only if pricing discipline holds: no chasing commissions, strict accumulation control on group schemes, and growth governed by risk-adjusted return rather than premium volume.
Power Re perspective
This commentary reflects Power Re’s reading of public market reporting. It is general information, not underwriting, investment or legal advice.
