Reinsurance rates will face downward pressure for the rest of the year as capital continues to flow into the market, according to Willis Re’s latest market report.

The Willis Group’s reinsurance arm says global reinsurance capital stands at $US425 billion ($534.63 billion) and rising supply has been compounded by three years of low catastrophe losses.

Willis Re Global CEO John Cavanagh says the market is being squeezed from all directions, “with underwriting and investment conditions compounded by the oversupply of capital”.

The six-monthly reinsurance report finds the major reinsurers are returning capital to shareholders, such as through large special dividends.

Some are also investing in insurance-linked securities and alternative funds to remain relevant in a highly competitive market.