Dedicated reinsurance capital hit a record US$648 billion at the end of 2025, an 11% rise on the year driven largely by retained earnings. The figure comes from Gallagher Re's latest First View report on the July 1 renewals.
Reinsurance revenues grew by just over 1% in the same period. That gap between capital and demand has persisted at every renewal date this year. Gallagher Re said it intensified again at mid-year.
Non-life alternative capital reached US$135 billion, up 18% year-on-year, with third-party capital increasingly directed toward casualty lines rather than catastrophe risk alone. Catastrophe bond issuance kept pace with 2025's record and reached US$15.6 billion by mid-June, as spreads compressed by roughly a fifth.
Property catastrophe renewals produced the sharpest rate movement of the cycle. Risk-adjusted reductions of 20% to 25% were available on the strongest North American accounts, while per-risk placements saw reductions of up to 20%.
Florida's June 1 renewals outpaced the broader US market, with price cuts of 25% or more on some programmes. Gallagher Re linked part of that shift to legislative reforms passed in 2022 and 2023. Cedent-level data show the scale of it.
Florida Citizens Property Insurance Corporation finalised its 2026 risk transfer programme at US$2.816 billion. Its net rate-on-line fell to 8.46% from 11.95% in 2025.
Investor appetite followed a similar path. A Gallagher Re and Gallagher Securities survey of more than 60 investors found roughly 90% planned to raise ILS allocations over the next two years.
Natural catastrophe losses totalled a minimum of US$38 billion in the first half of 2026, the lowest H1 total in more than a decade. Severe convective storm activity in the US drove at least US$22 billion of that figure.
Casualty renewals held broadly stable rather than soft. Reinsurers showed more differentiation between cedants than before.
Ceding commissions on quota shares rose modestly, by around 1% to 1.5% for well-performing books. US commercial auto stayed more difficult, with loss-affected excess of loss layers up 10% to 15%.
Healthcare liability pricing kept climbing in line with severity trends, led by hospital professional liability. Workers' compensation stayed profitable overall, even as large loss frequency and severity both rose.
Cyber reinsurance pricing remained highly competitive in specialty lines. Excess of loss placements saw reductions of 35% or more in North America, while ceding commissions on proportional cyber business hit a record 34.5%.
Aviation first-tier excess of loss pricing kept softening too. Gallagher Re said the pace had slowed as 2025 loss events began to shape reinsurer views of risk.
A major earthquake sequence struck north-central Venezuela on June 24. A magnitude 7.2 foreshock was followed less than a minute later by a magnitude 7.5 mainshock. Gallagher Re said the event, the country's strongest since 1900, had left more than 1,000 confirmed fatalities as of June 29.
A separate damage assessment has since put physical losses at US$6.7 billion. No major international insurer or reinsurer had disclosed exposure by the time that figure was published. Most of the loss is expected to fall outside private insurance altogether.
Casualty insurance-linked securities activity picked up through the second quarter. Gallagher Re described the segment as moving beyond a "proof of concept" phase, with several sidecar transactions closing during the quarter.
Gallagher Re's report also flagged a widening overlap between insurtech and artificial intelligence funding, an area it tracks separately from the renewal cycle. AI-focused companies took 95.2% of insurtech funding in the first quarter of 2026, up from 77.9% in the final quarter of 2025. Total funding across the sector reached $1.63 billion that quarter.
Tom Wakefield, global chief executive of Gallagher Re, said the market was shaped by strong capital, healthy returns and rising competition. He added that current conditions were giving cedants access to more tailored structures, at pricing not available in prior years.
Reinsurer returns are expected to moderate but stay comfortably above the cost of equity. Return on equity is projected at 14% to 15% for 2026, after a near-19% return in 2025. Gallagher Re said the market remained mid-cycle rather than at a trough.
That view was consistent with its April 1 report, which had already logged property catastrophe reductions of 15% to 25%. Loss-free accounts in Japan, the US, and the Philippines had pulled pricing down months before the July renewal.
