Aon has released its Snapshot Guide to the Reinsurance Renewal – September 2025 report, highlighting continued momentum among reinsurance buyers as the Jan. 1 renewal season begins.
The report points to a new high in global reinsurance capital, which reached approximately US$735 billion as of June 30, 2025. This growth was mainly driven by retained and redeployed earnings in both traditional and alternative capital sectors.
Within the total capital, alternative capital set a record at US$121 billion. Outstanding catastrophe bond volume rose to US$54 billion, representing an almost 20% year-over-year increase. As of August 15, catastrophe bond issuance for 2025 had already surpassed US$17.3 billion, exceeding the full-year total for 2024.
According to Aon’s mid-2025 reinsurance report, the market environment has shifted in favor of buyers, with increased flexibility in terms and conditions and expanded coverage options. The June 1 and July 1 renewals, which are critical for markets such as the US, Latin America, Australia, and New Zealand, took place in a competitive landscape.
Alfonso Valera (pictured above, left), CEO of International for Reinsurance Solutions at Aon, said, “Buyers can use the favorable reinsurance market dynamics to seize a strategic advantage, and so we are assisting our clients to secure the capital that can accelerate growth.”
The report notes that sidecars have become a significant and expanding source of proportional reinsurance capacity. These structures are helping insurers manage claims frequency and volatility, while the development of casualty sidecars has further broadened the market’s reach.
There has also been an increase in demand for facultative reinsurance, which is being used as a strategic tool to support insurer growth in a competitive environment.
The catastrophe bond market has continued its expansion, with record issuance of over US$16.8 billion in the first half of 2025. This included the two largest catastrophe bond transactions ever recorded, each exceeding US$1.5 billion.
Stephen Hofmann (pictured above, right), CEO of the Americas for Reinsurance Solutions at Aon, also noted that insurers can remain competitive by “leveraging attractively priced and diverse capital, and revisiting their long-term strategies and product mixes to support growth and manage volatility.”
Despite global insured catastrophe losses exceeding US$100 billion in the first half of 2025, ceded losses to reinsurers remained relatively limited. Reinsurer capacity was supported by strong results, with the average combined ratio across 30 global reinsurers at 94.8% for the first half of 2025, up from 89.5% in the same period last year.
The average ordinary investment return for reinsurers decreased slightly to 3.9% on an annualized basis, compared to 4.1% in 2024, though reinvestment rates generally stayed above book yields.
Reinsurance capacity was sufficient to meet a nearly 10% global increase in demand for property catastrophe limits. This demand was influenced by factors such as depopulation at Florida’s Citizens Property Insurance Corporation, inflation, model revisions, and updated catastrophe exposure views.
The influx of ILS capital contributed to a competitive pricing environment, especially in the middle layers of catastrophe programs where such capital is most active.
Meanwhile, Aon’s mid-year catastrophe recap report shows that 38% of overall global catastrophe losses were not insured in the first half of the year, with some regions exhibiting much lower insurance penetration.
This dynamic points to opportunities for growth, and Aon indicates it will continue to support clients in pursuing profitable expansion during the renewal season and beyond.
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