Light hurricane season offers profit boost for reinsurers: J.P. Morgan
J.P. Morgan’s latest report suggests that the 2025 Atlantic hurricane season has so far been unusually mild, which could deliver a strong profitability boost for global reinsurers. With only around 20% of their catastrophe loss budgets used to date, many firms – such as Swiss Re, SCOR, and Munich Re – are expected to post higher-than-anticipated earnings. J.P. Morgan estimates that if the rest of the season remains calm, reinsurers’ pre-tax profits could increase by roughly 6-13%, while even a moderate loss scenario could still yield a 4-8% uplift. The report notes that this reduced loss experience improves capital strength, provides more flexibility for underwriting, and helps companies meet their 2025 earnings targets. However, analysts also caution that the benign conditions might lead to softer pricing at the January 2026 renewals, as competition rises and clients push for lower rates. Overall, the light hurricane season presents a short-term financial tailwind for reinsurers, but it may accelerate the transition into a softer market cycle next year if the low-loss environment continues.
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Generali’s RT1 bond raises €500m, reinforcing financial strength
Generali has successfully raised €500 million through the issuance of its first perpetual Restricted Tier 1 (RT1) bond, a move aimed at strengthening its financial stability and flexibility under European insurance regulations. The bond was very well received by investors, with orders exceeding €4.6 billion, showing strong trust in Generali’s financial position. Most of the investment came from international markets, including the UK, Ireland, France, and Central Europe. An RT1 bond is a special type of financial instrument that helps insurers increase their capital without selling more shares. It works somewhat like a loan but with flexible conditions – it doesn’t have to be repaid on a fixed date, and Generali can skip interest payments if needed without being considered in default. In difficult times, part of the bond’s value can also be reduced to protect the company and policyholders, which is why regulators count it as a form of “safety capital.” By issuing this bond, Generali is gaining more financial security and preparing for future growth as part of its long-term strategy “Life Partner 27: Driving Excellence.”
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Reinsurance prices set to decline further at Jan 1 as market softens: J.P. Morgan
J.P. Morgan’s latest analysis indicates that reinsurance prices are expected to continue declining at the January 1, 2026 renewals, extending the softening trend that began earlier in 2025. Property catastrophe rates had already fallen by around 5% to 15% at the start of 2025, and analysts believe this downward trend could deepen if the remainder of 2025 passes without major catastrophes. Despite several large natural disasters, including the Los Angeles wildfires, the reinsurance sector still holds abundant capital and capacity, which is creating competitive pressure and driving prices down. Reinsurers are currently enjoying solid financial results thanks to light catastrophe losses and disciplined underwriting, but J.P. Morgan cautions that rising competition, excess capacity, and limited differentiation among market players are likely to extend the decline in rates into 2026. The firm expects reinsurers’ return on equity to decline next year, remaining positive but falling from 2025 levels as the market transitions from a recently profitable “hard” phase to a more competitive “soft” one.
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SCOR sees opportunities to grow in US cat at 1/1
SCOR SE, the French reinsurer, sees the U.S. property-catastrophe reinsurance market as a significant growth opportunity — the company is increasingly willing to deploy capital at roughly 1:1 risk-to-premium ratios in U.S. catastrophe business, meaning for every dollar SCOR collects in premium from insurers, it is willing to expose itself to about one dollar’s worth of possible losses. This shows the company’s confidence that current market prices are strong enough to cover future losses. SCOR has no regrets about increasing its involvement in this segment, even though it had a smaller presence before, and believes the timing is right to expand further. However, it also recognizes that the growing number of natural disasters and changing contract structures require caution, so it will continue to focus on careful, disciplined underwriting. In contrast, in U.S. casualty business (such as liability insurance), SCOR has reduced less profitable parts of its portfolio and expects limited growth for now because inflation and rising claim costs continue to affect profitability.
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