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Despite lower catastrophe claims in Q2 2026 providing a net positive for reinsurers’ profitability, they are unlikely to halt declining reinsurance prices, according to JP Morgan. In fact, the bank expects pricing pressure to intensify, particularly as this year’s Atlantic hurricane season is forecast to be lighter than average due to El Niño.
JP Morgan said in a new report that Q2 2026 should mark the fifth quarter in a row in which catastrophe losses are below the historical average of $20 billion.
“Based on our bottom-up assessment of the major catastrophe events this quarter, we estimate there are likely to be insured losses of roughly ~$15 billion, with severe convective storms (SCS) in the US accounting for the majority of the total,” the firm explained.
Q2 2026 reportedly saw more than 90% of insured losses driven by SCS, with JP Morgan noting that SCS has consistently been a major contributor to total insured losses in recent years.
Estimated SCS-related losses were around $64 billion in 2023, over $50 billion in 2024, and approximately $49 billion in 2025.
Gallagher Re has estimated 2026 year-to-date insured loss costs from SCS in the US at around $22 billion.
This is below the five-year average ($38 billion) and the 10-year average ($30 billion), but it still makes 2026 the eleventh consecutive year with more than $20 billion of insured SCS losses in the US.
Aside from SCS in the US, SCS losses in Europe are expected to cost insurers hundreds of millions of dollars, according to data from Aon.
JP Morgan noted that Q2 2026 has not seen any major losses that it would consider to be reinsurance events.
“Lower catastrophe claims, even though good for the profitability of reinsurers, can also be bad news, as they will not help with declining prices and will likely lead to more pricing pressure,” the firm said in its report.
JP Morgan continued, “The first half of 2026 in aggregate should have been very profitable for the reinsurers. Therefore, as companies are likely to be well on the way to achieving their profit goals for the year, we expect that the reinsurers will seek to ‘manage’ earnings in the second half of 2026 via additions to reserve buffers and other areas that allow the build-up of prudence.
“Reinsurance pricing in 2026 has seen a rapid pick-up in the speed of prices falling, with the January renewals showing a 12% decline based on Guy Carpenter data, with this level moving to 16% at the mid-year renewals.
“The direction of prices tends to follow loss experience; therefore, a light 2026 for catastrophe losses is unlikely to help stop the reductions in prices seen in the market.
“The 2026 Atlantic hurricane season is forecast to be lighter than average due to El Niño. Thus, while profits are expected to be strong in 2026, at this stage there is little, in our view, to show that a floor will be found on pricing in the near term.”
The post Unlikely a floor will be found on reinsurance pricing in the near term: JP Morgan appeared first on ReinsuranceNe.ws.
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