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Global reinsurance dedicated capital increases 5% to $805 billion in H12025: Gallagher Re

by AIP Online Bureau | Sep 3, 2025 | Eco/Invest/Demography, Intermediaries, International News, Non-Life, Reinsurance | 0 comments

Gallagher Re estimated that the private insurance market and public insurance entities covered at least USD84B38 in losses from natural perils in 2025 HY, increasing from USD61B39 as originally reported for 2024 HY. This represents the costliest H1 for the industry since 2011 and is 55% higher than the decadal average (USD54B).

London: Global reinsurance dedicated capital totalled USD805 billion at half-year 2025, an increase of 4.8% versus the restated full year 2024 base. Growth was driven by both the INDEX companies and non-life alternative capital. Non-life alternative capital increased by 3.6% to USD118B, driven by net inflows and favorable performance, said Gallagher Re.

“Taking into account the industry’s profit outlook for the full year and considering capital returns, we estimate that 2025 FY traditional reinsurance capital will increase by about 8% (USD >57B),” said Gallagher Re.

Gallagher Re estimated that the private insurance market and public insurance entities covered at least USD84B38 in losses from natural perils in 2025 HY, increasing from USD61B39 as originally reported for 2024 HY. This represents the costliest H1 for the industry since 2011 and is 55% higher than the decadal average (USD54B). The losses were skewed by the costs from the January California/Los Angeles wildfires and elevated US severe convective storm activity, while the rest of the world experienced below-average activity, potentially explaining the wide spread of natural catastrophe outcomes across the segments.

“Reinsurers are well positioned to maintain strong profitability in 2025. Assuming a ‘normal’ level of natural catastrophe losses, we expect an underlying ROE of 13-14% and a headline ROE of approximately 17-18%1 for the full year, both significantly above the industry’s cost of capital,” said the re/insurance broker.

Supported by continued strong profitability, traditional reinsurance capital is on track to increase by roughly 8% in 2025. The reinsurance industry continues to be supported by significant capital buffers which can absorb potential sources of volatility. Continued attractive profitability means the industry remains financially robust and in a strong position to absorb any potential future volatility

Still at historically strong levels, Gallagher Re’s in-depth analysis of a subset of 16 reinsurers shows the reported and underlying combined ratios increased to 87.5% (2024 HY: 84.6%) and 94.7% (2024 HY: 94.2%) respectively.

Global reinsurers’ capital adequacy remains strong on an economic basis, the measure which Gallagher Re views as more relevant for management teams’ decision making. Average solvency for the top four European reinsurers increased marginally to 268% (2024 FY:265%) which, on average, is well above the top end of the target solvency range set by these companies.

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