Design Highlights
- The 9% growth in reinsurance capital creates abundant capacity, leading to increased competition among reinsurers.
- Record catastrophe bond issuance of $16.8 billion in H1 2025 enhances market liquidity and stability.
- Strong profitability metrics, including a 17.6% expected return on equity, allow reinsurers to offer more competitive rates.
- Softening rates are evident as property markets shift to a buyer’s paradise due to reduced demand for high-priced coverage.
- Insured losses in 2025 are projected to be 18% below average, reducing pressure on reinsurers and enabling lower renewal rates.
In the world of reinsurance, it’s all about the numbers—and right now, those numbers are looking pretty good. Capital dedicated to reinsurance has surged by a solid 9% in 2025, following 7% increases in the previous two years. By Q1 2025, global reinsurer capital hit an impressive $720 billion, marking a $5 billion bump. Fast forward to the halfway point of 2025, and total dedicated capital reached a staggering $805 billion. If you’re doing the math, that’s a lot of cash floating around, and it’s making waves in the market.
But it isn’t just traditional capital that’s thriving. Alternative capital is charging ahead too. Catastrophe bond issuance shattered records, hitting $16.8 billion in the first half of 2025. Alternative capital grew by 3.6%, contributing to that whopping $805 billion total. As of mid-2024, it already exceeded $113 billion. That’s right; investors are throwing money at the insurance-linked securities market, which you might say is stabilizing the whole capacity scene.
Now, let’s talk profitability. Reinsurers are expecting a return on equity (ROE) of 17.6% in 2025, climbing from 16.4% in 2024. That’s a nice jump, isn’t it? Strong underwriting profits and retained earnings are the secret sauce here, fueling capital growth like a high-octane fuel for a race car. It’s no wonder two-thirds of reinsurers reported double-digit ROE in Q1 2025.
Lower catastrophe losses have played a part too. Insured losses are pegged at $121 billion in 2025—18% below the five-year average. A kinder-than-usual wind season in the U.S. helped reduce those pesky losses. Reinsurers are sharing less of the pie, thanks to those high attachment points. Since 2020, losses have been over $100 billion annually, but 2025 is shaping up to be a milder year. Additionally, record global insured losses in Q1 2025 at $60 billion highlight the market’s response to these conditions.
Then there’s the capacity abundance. With all this excess capital, reinsurers are enthusiastic to grow. The property market is a buyer’s paradise, with traditional reinsurers, ILS, and new players all vying for a piece of the action. Increased property catastrophe demand has also emerged due to both traditional and alternative capacity solutions. As reinsurers compete for market share, the industry is reportedly paying out over $25 million daily in claims across various insurance lines.
Yet, amidst this abundance, rates are softening. Catastrophe rate-on-line has dipped into double digits globally, particularly in Europe and Latin America. As the January 1, 2026 renewal trends loom, expectations of continued softening are palpable.
Reinsurers, flush with cash, are stabilizing underwriting and competing fiercely. It’s a game of numbers, and right now, the reinsurers are winning.
