Reinsurance prices fell by as much as 25 percent in key markets mid-year as pension funds poured in money and demand for cover from insurance companies remained subdued, brokers said on Tuesday.

Reinsurers have been negotiating with insurance company clients in the United States, Australia and Latin America to set the terms and prices for shouldering big risks like hurricane and earthquake damage in contracts that take effect from July 1.

The reinsurance industry’s biggest players – Munich Re, Swiss Re and Hannover Re – have been unable to halt a decline in its pricing power, due to the “soft market.”

“The tentacles of the softening market are spreading far and wide, with no immediate signs of relief,” said John Cavanagh, chief executive of Willis Re.

Willis said property catastrophe reinsurance prices fell by as much as 25 percent in hurricane-prone Florida and were down by a fifth nationwide in the United States.

The industry’s weak pricing power was one reason credit rating agency Moody’s changed its outlook on the reinsurance sector to negative from stable last month.

The global slump in interest rates since the financial crisis has made it hard for reinsurers to earn a good return from investments. It has also tempted pension funds, institutional investors and high net-worth individuals to invest in capital market products that compete with traditional reinsurance, such as catastrophe bonds.

Total catastrophe bond issuance in the first half of 2014 exceeded that seen in the first half of 2013 by 50 percent, said Bryon Ehrhart, CEO of Aon Benfield Americas.

Cat bonds covering extreme risks, such as those from earthquakes or hurricanes, transfer them to capital markets investors, who receive a high yield on the bonds they buy in return for agreeing to cover damages they consider unlikely.

“The use of alternative capital during both the first and second quarters has been robust, with twelve catastrophe bonds completed during the second quarter of 2014,” Ehrhart said.

Moody’s said another 15-20 percent drop in catastrophe insurance prices next year would push them below 2001 levels, making it difficult for some reinsurers to earn their cost of capital.

Highlighting the challenges, Berkshire Hathaway chairman and chief executive Warren Buffett said earlier this year his firm had eliminated most of its catastrophe insurance business in the United States.

Other big reinsurance players have been working to avoid being caught in a stampede towards lower prices, saying they are maintaining a focus on profit and are willing to drop business that carries too low a price for the risk involved.

JP Morgan analyst Michael Huttner has forecast a 5 percent decline in reinsurance prices charged by Munich Re, Swiss Re, Hannover Re and French reinsurer SCOR at July’s contract renewals.

Traditional reinsurers have been trying to exert more influence in the market, XL Group Chief Executive Mike McGavick said.

“We’ve been able to maintain our book,” he said of his company’s own performance in the July reinsurance contract renewals. “It’s certainly a fist-fight but we’re feeling pretty good about how we’ll come out.”

(Reporting by Jonathan Gould; Editing by Catherine Evans)