Reinsurers face ‘conundrum of success’ after profits surge but softer market looms – Oxbow Partners

Reinsurers are entering the next phase of the market cycle from a position of unusual strength, with record profits, strong capital buffers and improving underwriting discipline across the sector.

However, that success is creating a strategic dilemma for leadership teams as pricing begins to soften and the industry looks ahead to a more competitive environment.

A new report, titled “CEO Agenda 2026: Reinsurance – The Conundrum of Success”, from Oxbow Partners, argues that reinsurers must now rethink their strategy, capital deployment and organisational structures if they are to sustain returns through the next cycle.

The report highlights the scale of recent profitability across the sector.

“The reinsurance market is riding high, posting bumper profits in 2023, 2024 and 2025 for those who have reported.”

According to Oxbow’s analysis, underwriting profit across leading reinsurers reached a decade high of $14.8bn in 2024, with results in the first three quarters of 2025 already surpassing the previous year’s full-year outcome.

Strong performance reflects a combination of disciplined pricing, tighter wordings and higher attachment points following the market pricing reset that began in 2023.

At the same time, reinsurers have benefited from relatively benign catastrophe losses, particularly a quieter period for US wind events.

Despite these results, the report suggests that the market cycle has already peaked.

While the recent profitability has been exceptional, Oxbow notes that “2026 renewals were down across the board, with some property lines reducing by double digits year on year”.

Several market indicators now suggest that pricing reached its high point in 2024.

Even so, the firm believes that the coming softening may prove less severe than previous cycles.

Investor sophistication has increased, while structural risks such as climate change, social inflation and geopolitical instability continue to support the need for sustainable returns.

“There are reasons to believe that the cycle will show less amplitude than in the past,” the report notes, adding that many industry leaders expect the 2027 renewal season to remain “orderly, even if down from the highs of recent years”.

A key challenge for reinsurers is what to do with the significant capital accumulated during the current upswing.

Record underwriting profits have left many major players with solvency ratios well above their target ranges, creating what Oxbow describes as “bulging war chests”.

The dilemma is that deploying too much capital into underwriting could accelerate the very market softening that reinsurers are trying to avoid.

“This creates a strategic conundrum for reinsurers: what can they do with this capital that does not simultaneously undermine their performance by flooding the market with underwriting capital,” the report says.

The firm sets out five priorities for reinsurance CEOs as the cycle evolves.

The first is to reassess corporate strategy in a changing market environment.

Historically, reinsurers delivering stable and consistent returns on equity have been rewarded with higher market valuations, highlighting the importance of protecting underwriting discipline as conditions soften.

At the same time, the report notes that the role of reinsurance within broader insurance groups is shifting.

“In 2026, most reinsurance capital is an ‘option’ in a company’s portfolio strategy, and sometimes just an opportunistic, secondary business model,” Oxbow’s report says.

Another priority is developing a clearer long-term strategic vision, according to the consulting firm.

Oxbow argues that while reinsurers tend to focus heavily on annual renewal cycles and long-term relationships, many lack a clearly articulated five-to-ten-year plan that defines where they will compete and how they will win.

Companies also need to prepare management teams for tougher decision-making as market conditions weaken.

According to the report, effective executive decision-making requires strong alignment around strategic priorities, disciplined use of data, and a culture that challenges assumptions and recognises bias.

Beyond strategy and governance, organisational structure will also need to evolve as companies scale.

Many reinsurers have grown rapidly over the past decade, moving from what Oxbow describes as “big small” companies driven by entrepreneurial individuals to more complex organisations requiring stronger governance and clearer operating models.

Finally, the report emphasises the growing importance of artificial intelligence across the sector.

While the consultancy has historically been sceptical of technology claims in insurance, it argues that AI represents a genuine shift.

“AI has matured from a shiny gimmick into a technology that has the potential to upend industries. It is real, and in contrast to previous technology waves it is not a single point solution,” says the study.