According to Guy Carpenter’s January 2026 renewal report, dedicated reinsurance capital is projected to rise by around 9% in 2025, reaching $660 billion, driven by a 10% increase in alternative capital.
Dean Klisura, Guy Carpenter’s President and CEO, explained that this capital growth is supported by underwriting profits, retained earnings, recovering asset values, and strong investor interest—particularly in alternative capital and catastrophe bonds.
He added that trade tensions have not affected capital flows, with the reinsurance market continuing to “function well”.
Guy Carpenter’s report has also forecasted an additional $50 billion in capital between 2025 and 2027.
In 2025, retained earnings reportedly helped support traditional capital growth following a year of insured catastrophe losses totalling $121 billion, 18% below the five-year inflation-adjusted average, due to a benign US wind season.
Guy Carpenter highlighted that rate and attachment point adjustments since January 1, 2023, have created a new paradigm, reducing the reinsured share of catastrophe losses from 20% (2022 and earlier) to a new average of 12%.
These factors contributed to 17% returns on equity, as measured by the firm’s reinsurer composite.
Looking ahead, further declines in interest rates and bond yields could spur additional growth in alternative capital, as its relatively uncorrelated return potential becomes more attractive.
Adding more on the innovation in this space, Klisura said, “Sidecars continue to be a significant trend across multiple lines of business, though they have gained particular attention for longer-tail portfolios.
“This is part of a larger trend in which insurance businesses seek additional sources of capacity from capital markets, and investors aim to get direct access to insurance risk in order to deploy proactive investment strategies.”
