New analysis from global professional services firm Aon suggests that global property and casualty insurers are entering the next phase of the market cycle from a position of strength, creating an opportunity to turn recent profitability gains into long-term competitive advantage.
The benefits of “acting now” are significant, Aon said, as stronger profitability gives insurers the flexibility to invest in underwriting, portfolio analytics, reinsurance strategy, digital capabilities and talent.
The analysis marks the start of Aon’s Reinsurance Renewal Season and is the firm’s third annual review of 120 global property and casualty insurers.
Aon’s analysis found that return on average equity (RoAE) reached 16.8% in 2025, marking the highest level observed since it began tracking the cohort in 2009.
“The result marked the fifth consecutive year of RoAE improvement since the 2020 downturn, and was supported by stronger underwriting income, favourable market conditions and a relatively benign catastrophe year,” the firm explained.
Aon continued, “The findings also show that market conditions are becoming more varied: the proportion of carriers increasing their RoAE year-on-year declined from 74% to 60%, while premium growth slowed for a fourth consecutive year to 5.2%, below the decade average and less than half the level recorded in 2021. The combined operating ratio improved to 91.1% – the lowest level of the decade – although performance dispersion widened across the sector.”
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Aon’s analysis has underlined five key areas for insurers to avoid as they seek to sustain profitable growth: Don’t confuse strong returns with sustainable growth; don’t defer difficult choices on where to grow; don’t miss the opportunity to make capital a strategic asset; don’t delay investments in people and technology; and don’t let AI become someone else’s advantage.
Paul Campbell, Global Growth Officer, Strategy and Technology Group, Aon, commented, “The hard market restored profitability for many insurers, but long-term performance will increasingly depend on differentiation.
“As growth becomes harder to sustain, the gap between growth and profitability continues to widen, creating new strategic choices for insurers.
“Insurers best positioned to outperform will be those that use today’s earnings strength to make better decisions on where to grow, how to deploy capital and which capabilities to build for the next phase of the cycle.”
As mentioned, Aon said the benefits of acting now are significant, with stronger profitability creating greater flexibility for insurers to invest in underwriting, portfolio analytics, reinsurance strategy, digital capabilities and talent.
“It also gives leadership teams the opportunity to distinguish structural earnings improvements from those that are more dependent on cyclical conditions, helping them avoid over-reliance on rate increases or broad market growth,” the firm explained.
Aon’s analysis also pointed to increasing differentiation across the market, with property and casualty and reinsurance markets beginning to follow different trajectories, while globally diversified and specialist carriers continue to show stronger relative performance.
“As a result, broad market participation is likely to be less effective than targeted decisions on portfolio mix, capital allocation, risk appetite, operating model investment and strategic acquisitions,” Aon said.
Campbell concluded, “Market cycles create opportunities, but they do not create lasting advantage on their own. The insurers that emerge strongest from this period will be those that use today’s earnings strength to build capabilities, sharpen capital allocation and position their businesses for the next phase of growth.”
