Global reinsurer capital increased by almost 10% in 2025, ending the year at a record $785 billion, with new highs set for both traditional equity and alternative capital, providing the industry with ample room to absorb growing risks, according to broking group Aon.
The broker has released its April 2026 renewal Reinsurance Market Dynamics report, which examines the record level of capacity available in the market to address expanding risk management challenges.
Aon attributes the almost 10%, or $70 billion year-on-year increase in global reinsurer capital in 2025 to strong retained earnings, additional mark-to-market gains on bonds taken directly to equity, and new inflows supporting both sidecars and catastrophe bonds.
The broker estimates that traditional capital grew by more than 8%, or $49 billion in 2025 to a new high of $649 billion, driven mostly by strong retained earnings. Reinsurers enjoyed a third consecutive year of strong underwriting results in 2025, underpinning capital strength, with an ROE of 17% being roughly double the cost of equity.
In fact, the average reinsurance-specific combined ratio across 18 companies surveyed was 88.5% in 2025, down from 90.1% in 2024, and 90.7% in 2023. Further, investment returns are still providing strong support to overall earnings for many.
“Record levels of capital and easing retrocession market conditions are increasing competition at the 2026 renewals. At this stage, improvements for buyers are mainly confined to price reductions from high levels, with underlying structures coming under growing pressure, but remaining largely intact,” explains the broker.
Aon estimates that third-party, or alternative reinsurance capital hit a new high of $136 billion in 2025, an increase of more than 18% year-on-year, as strong non-correlating returns continue to attract new commitments and reinvested profit.
“The growth was led by unprecedented demand from clients, which sought to increase the amount of total reinsurance limit placed as well as the proportion of limit placed with third-party capital. Investors were happy to respond to this demand having achieved strong returns in recent years, and were able to deploy capital from catastrophe bond maturities and earned coupons, as well as investing further capital inflows,” explains Aon.
Mike Van Slooten, Head of Market Analysis Reinsurance, Aon, commented: “This year’s renewal outcomes are positioning most reinsurers to exceed their cost of capital in 2026, assuming ceded losses stay within expected ranges. That said, rising geopolitical tensions and capital market volatility introduces greater uncertainty.”
“Looking ahead to the remainder of 2026, we anticipate that the catastrophe bond market and broader third-party capital activity will remain robust, supported by strong investor appetite, the continued recycling of maturing limit and attractive returns. Aon Securities is uniquely positioned to help our clients raise third-party capital as we recently surpassed $100 billion during the past 25 years,” said Richard Pennay, CEO, Aon Securities.
