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This paper presents a method for the calculation of eddy current losses in the permanent magnets, which takes into account the reaction of induced eddy currents. The developed quasi-3-D analytical method considers the effects of axial and circumferential segmentation of magnets. The 2-D time-stepping finite element method and 3-D time harmonic finite element method are used to evaluate the accuracy of the analytical method. A high speed surface-mounted permanent magnet motor with Samarium Cobalt magnets is used for detailed simulations. High-frequency time harmonics of the inverter are considered for analysis of magnet eddy current losses. The novelty of the proposed analytical method is the direct consideration of the reaction of induced eddy currents in the magnets due to travelling and pulsating field waves.