The global reinsurance sector delivered a standout performance in 2025, with profitability and capital reaching unprecedented levels, according to Gallagher Re’s Full Year Reinsurance Market Report.
Total dedicated reinsurance capital rose to a record $648 billion, representing an 11% increase on 2024 and marking the second-strongest year for capital growth in more than a decade.
As per Gallagher Re, the expansion was fuelled by retained earnings across traditional reinsurance balance sheets, alongside historic inflows into non-life alternative capital.
Gallagher Re’s reinsurance composite, which tracks leading global reinsurers, recorded a return on equity (ROE) of 19.3% for 2025.
The result was underpinned by strong underlying earnings and relatively benign natural catastrophe activity, making it one of the highest ROEs observed since the report’s inception.
Michael van Wegen, Head of International, Gallagher Re Global Strategic Advisory, commented, “2025 was a landmark year for the reinsurance industry, with reinsurers achieving historic levels of profitability and capital growth.”
Looking ahead, Gallagher Re said it expects returns to moderate, projecting a composite ROE of 14–15% in 2026.
The forecast assumes a normalisation of natural catastrophe losses, alongside continued contributions from realised capital gains and reserve releases.
Meanwhile, growth in traditional reinsurance capital is expected to slow to around 4%, although the industry is likely to continue accumulating excess capital.
This dynamic may create increasing challenges around capital deployment as market conditions soften, Gallagher Re observed.
van Wegen concluded, “While the reinsurance industry has enjoyed several years of exceptional returns, the dynamics of supply and demand have shifted in favour of buyers, as evidenced by rate softening during the January 1 and April 1 renewals.
“Despite this, the industry remains resilient, with profitability expected to remain well above the cost of equity in 2026.”
