Global reinsurance capital reached $648 billion in 2025, rising 11% while demand grew about 1.4%, shifting market conditions toward buyers and driving rate reductions at key renewals.
The gap between capital supply and demand has become more pronounced entering 2026. Gallagher Re data show capital growth far exceeded revenue expansion, while renewal outcomes confirmed downward pressure on pricing across multiple lines.
Findings from Aon’s April 2026 renewal analysis show that record capacity and competition from insurance-linked securities contributed to double-digit reductions in several regions, particularly in property catastrophe business. At the April 1 renewal, insurers in Asia Pacific secured price reductions and more flexible terms, supported by benign catastrophe losses and strong capital levels.
Fitch Ratings, meanwhile, reported that risk-adjusted prices declined across most lines at the January 1 renewals, with property catastrophe and retrocession rates falling by 10%–20% on loss-free placements, while specialty lines recorded smaller decreases and casualty pricing remained more balanced.
“While the reinsurance industry has enjoyed several years of exceptional returns, the dynamics of supply and demand have shifted in favor of buyers, as evidenced by rate softening during the January 1 and April 1 renewals,” said Michael van Wegen, head of international at Gallagher Re Global Strategic Advisory.
Total reinsurance capital reached $648 billion in 2025, driven by retained earnings and alternative capital inflows. Traditional reinsurance capital rose to $513 billion, accounting for about two-thirds of the increase.
Since 2022, traditional capital has grown by more than 50% cumulatively, compared with about 20% growth in revenue, reflecting earnings retention outpacing premium expansion.
Alternative capital expanded 18% to $135 billion, the largest annual increase recorded in the report’s history. Aon estimated third-party capital at about $136 billion by year-end 2025, supported by investor inflows and strong returns in catastrophe bonds and related instruments.
Aon also estimated total global reinsurer capital at $785 billion, including both traditional equity and third-party capital, indicating broader capacity available across the market.
Reinsurers reported a 19.3% return on equity (ROE) in 2025, based on Gallagher Re’s composite of leading companies. The result was supported by underwriting performance, reserve releases, investment gains and lower-than-average catastrophe losses.
“2025 was a landmark year for the reinsurance industry, with reinsurers achieving historic levels of profitability and capital growth,” van Wegen said.
Underwriting results improved, with combined ratios falling to 84.3% for reinsurance groups and 82.5% for the composite, both the lowest levels recorded in the report series.
Aon reported a sector combined ratio of 88.5% across surveyed reinsurers, also showing improvement from 90.1% in 2024.
Global insured catastrophe losses totaled $129 billion in 2025, down from $154 billion in 2024 and about 5% below the 10-year average, contributing to underwriting performance. Aon reported similar loss levels, noting that peak peril losses were low and a large share of secondary perils remained with primary insurers.
Underlying profitability showed some decline despite the headline ROE. The composite’s underlying ROE fell to 13.5% in 2025 from 14.5% in 2024, reflecting higher combined ratios and capital growth outpacing earnings.
Revenue growth slowed to about 1.2% for the composite, compared with 9.7% in 2024, linked to pricing changes across property and specialty lines.
Fitch Ratings said profitability is expected to decline in 2026 due to lower pricing and rising loss costs, although operating conditions are expected to remain sound.
The increase in available capital has created pressure on deployment. Gallagher Re expects traditional capital growth to slow to about 4% in 2026, even with continued earnings generation and increased shareholder returns.
Aon noted that abundant capacity has led insurers to purchase additional limits, reduce retentions and expand use of structures such as frequency covers and proportional treaties, particularly during the April renewals.
The presence of excess capital, combined with competitive pricing, has also contributed to easing terms and conditions compared with 2023, with broader coverage and lower attachment points becoming more common, according to Fitch.
Gallagher Re projects ROE to decline to 14%–15% in 2026, assuming normalized catastrophe losses and typical contributions from investment income and reserve releases.
Returns are expected to remain above the cost of equity, estimated at 11.7%.
“Despite this, the industry remains resilient, with profitability expected to remain well above the cost of equity in 2026,” van Wegen said.
Across the market, pricing has moved closer to 2022 levels while remaining above earlier cycle lows, according to Fitch. Capital levels are expected to remain elevated, supported by retained earnings and continued participation from alternative capital providers.
