Gallagher Re’s 2026 HY Reinsurance Market Report found that total dedicated reinsurance capital rose 5% in the first half of 2026 to a record $688 billion, supported by continued growth in both traditional and alternative capital, as the industry’s financial position remains “extremely robust.”
According to the report, traditional reinsurance capital increased 4%, while non-life alternative capital grew 9% during the first half of the year.
Against this backdrop, Gallagher Re identified a growing divergence in how reinsurers are responding to excess capital.
While many carriers have increased dividends and share buybacks, the report suggested that capital accumulation continues to outpace capital returns.
This trend is reportedly being reinforced by the continued momentum of alternative capital, which is expanding into a broader range of business lines.
Despite the increasingly competitive market environment, Gallagher Re’s Composite, which tracks the performance of leading global reinsurers, reported a 19.9% return on equity (ROE) for the first six months of 2026.
This was the second-highest half-year result recorded over the past decade.
“Strong earnings were supported by healthy underlying profitability and materially lower-than-normal natural catastrophe losses,” Gallagher Re explained.
Reflecting the stronger-than-expected first-half performance, Gallagher Re has increased its full-year 2026 ROE forecast for the Composite to 16.5%-17.5%, up from its previous estimate of 14%-15%.
“The revised outlook assumes normalised natural catastrophe losses during the second half of the year and contributions from reserve releases and realised investment gains in line with long-term averages,” Gallagher Re explained.
The firm has anticipated that, by year-end, the Composite will have generated approximately $13 billion of cumulative profits above the cost of equity across the 2017-2026 period, reportedly demonstrating the industry’s ability to create value across both hard and soft market conditions.
Michael van Wegen, Head of International, Gallagher Re Global Strategic Advisory, commented on the findings, “The first half of 2026 demonstrates that the reinsurance industry remains in a position of exceptional financial strength. Reported returns remain well above the cost of equity, capital continues to grow, and the sector has built substantial resilience against future volatility.”
“However, the challenge facing the industry is increasingly becoming one of capital deployment rather than capital generation. Capital continues to grow faster than revenues, adding to an already significant supply and demand imbalance across many reinsurance markets.
“The industry’s financial position remains extremely robust. Our analysis suggests the sector could absorb a USD50-75 billion insured loss event, in addition to normal second-half catastrophe activity, and still earn its cost of equity for 2026.”
