The global reinsurance market continues to show profitability, resulting in significant excess capital and a range of options for clients as they approach the Jan. 1, 2026 renewals, according to Gallagher Re.
The broker reported at a pre-conference briefing ahead of the Monte Carlo Rendezvous that global reinsurers have built up capital in the first half of 2025, supported by retained earnings.
Gallagher Re’s Reinsurance Market Report indicates that, assuming a normalized level of natural catastrophe losses for the rest of the year, reinsurers are expected to post a full-year return on equity of 17% to 18% in 2025.
Catastrophe losses have already reached US$90 billion by late July and are projected to surpass US$100 billion for the eighth time since 2017. The market’s ability to absorb these losses is underpinned by global reinsurance capital, which stood at US$805 billion as of mid-year 2025.
“To put this in context, we estimate it would take a US$115 billion insured loss event, on top of current 2025 cat losses, plus normalized catastrophe losses for the rest of the year, to reduce the average industry ROE for the 2017-2025 period to a low double-digit level.” said Tom Wakefield (pictured above), global CEO at Gallagher Re.
He noted that while returns remain strong, reinsurers have found it challenging to deploy as much capital as they would like during the mid-year renewals.
For cedants, the current environment of softening underlying rates means that growing underwriting income will depend more on expanding exposure or improving margins. Clients are presented with a variety of risk management strategies, including adjustments to attachment points, structural innovations such as frequency covers, shared limits, and changes to the number of perils covered or coverage duration.
Reinsurers seeking growth are expected to attract more interest by offering products that align with cedants’ strategic objectives and support volatility protection at acceptable risk levels.
“Available capital, attractive margin, and the desire for growth are all coming together to fuel greater market responsiveness and product innovation,” said Lara Mowery, chief commercial officer at Gallagher Re.
Will Thompson, head of global clients at Gallagher Re, said, “In the next phase of the market cycle, the challenge for insurers will be how to deliver on growth targets in a softening rate environment.” He added that Gallagher Re will advise clients to seek structures and coverage that reflect current reinsurer appetite, rather than relying on previous years’ approaches.
Andrew Newman, president of Gallagher Re, highlighted the role of insurance-linked securities (ILS) and alternative capital, noting that 2025 marks the third consecutive year of record growth in cat bond issuance and non-life assets under management.
Newman said the cat bond sector is positioned for continued growth, with strong investor demand and active sidecar participation from sponsors and investors.
Clients now have more flexibility in how they structure their capital stack, with both internal and external components, and can use similar strategies to those in the life sector to enhance valuations.
Printhan Sothinathan, CEO of Data and Analytics at Gallagher Re, introduced Gallagher Re Insight, a new platform designed to provide clients with real-time, AI-driven analytics and tailored risk insights. Sothinathan said the platform will enable faster data transfers and analysis, supporting more informed decisions and improved outcomes for risk management.
“The launch of Insight is the critical foundational cornerstone of a collaborative journey that starts next year,” he said.
Sothinathan said the speed at which Gallagher Re will deliver new insights to stakeholders will foster innovation, product development, and collaboration with clients and markets in the months following the launch.
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