Insurers were able to achieve significant decreases in pricing and improved terms at renewal.Competition was particularly fierce in the U.S. property catastrophe market, with preferred risks typically achieving strong double-digit rate reductions at 1/1.Property renewals in EMEA, Latin America and Asia Pacific also saw double-digit discounts for non-loss impacted accounts with few exceptions
Chicago: Global reinsurer capital reached a new high of $760 billion at the end of September 30, 2025, an increase of $45 billion relative to the end of 2024, driven largely by reinsurers’ retained earnings and record levels of third-party capital, said Aon in its latest report “Reinsurance Market Dynamics, January 2026 Renewal.”
Aon estimated that equity reported by global reinsurers rose to a new high of $636 billion at September 30, 2025, an increase of $36 billion relative to the end of 2024, driven principally by strong retained earnings. Unrealized gains on bonds taken directly to equity also provided a tailwind, reflecting declining interest rates in the period. Investment in new rated start-up reinsurers remained very modest in 2025
Third-party capital reached an estimated new high of $124 billion at September 30, 2025, an increase of $9 billion relative to the end of 2024, as strong non-correlating returns continue to attract new commitments and reinvested profit. Increased
investor appetite is lowering retrocession costs and allowing many traditional reinsurers to expand their sidecar and/or catastrophe bond programs
According to the report record-breaking capital and a benign hurricane season set the stage for fierce competition at January 1, exacerbated by growing appetite from third party capital providers for insurance risk.
Capitalising on a buyers’ market, insurers were able to secure significant decreases in pricing and improved terms overall – creating new opportunities to reinvest savings to address customers’ unmet needs and drive profitable growth with new solutions, added the report.
Despite total industry insured losses from natural catastrophes exceeding $100 billion for the sixth consecutive year, reinsurers are set to produce yet another year of strong results in 2025.
The reinsurance sector reported an average annualized return on equity of 16 percent for the first nine months of 2025, well in excess of the average cost of equity.Buyers explore options to reinvest premium savings With excess capacity in the market and stable demand, insurers achieved favorable outcomes at the January 1 property renewals.
Competition was intense and widespread as reinsurers sought to grow and demonstrate their relevance, while third-party capital markets continue to expand and broaden their appetite.
As a result, insurers were able to achieve significant decreases in pricing and improved terms at renewal.Competition was particularly fierce in the U.S. property catastrophe market, with preferred risks typically achieving strong double-digit rate reductions at 1/1.Property renewals in EMEA, Latin America and Asia Pacific also saw double-digit discounts for non-loss impacted accounts with few exceptions.
While insurers were broadly comfortable with current levels of protection at 1/1, many are likely to explore additional solutions to strengthen capital positions and support profitable growth initiatives.
Buyers returning to the market will find a wide range of complementary reinsurance and capital products. Frequency covers and earnings protection are increasingly available.
“We are seeing growing interest in bespoke transactions such as structured solutions, loss portfolio transfers and facultative reinsurance, including hybrid treaty/facultative facilities. Widening pool of capital with each year, the relevance of alternative sources of capital continues to grow. Third-party capital reached a new high of $124 billion at the end of the third quarter, an increase of $9 billion relative to the end of 2024,”
The catastrophe bond market ended the year at an all-time high with more than $24 billion issued across 74 sponsors and $59 billion in catastrophe bonds outstanding. The sidecar market also continued to grow in 2025 through new (re)insurers, new investors and new structures with the property sidecar market at $17.9 billion of invested capital and the casualty sidecar market at $1.7 billion of invested capital. While the estimated $1.7 billion of sidecar investment into casualty is small relative to property, these structures give insurers and reinsurers more flexibility in an improving market.
Recent investor interest in these transactions is due to higher interest rates and the growth in U.S. private credit platforms and we expect more of these transactions needs to be plural executed in 2026.
“We anticipate another year of growth for third-party capital as investors demonstrate consistent appetite for catastrophe bonds and sidecars. New capital sources continue to enter the market, with large alternative asset managers, such as Blackstone and Brookfield, having recently emerged as active participants in the property and casualty industry,” explained the report.
Such firms increasingly see reinsurance as a source of non-correlating insurance product that, coupled with investment returns, can support fast-growing private debt strategies, often with lower return hurdles than private equity.
An increasingly diverse range of capital providers, supporting an expanding range of insurance risks through a variety of structures, is positive news for clients.
Consolidation and excess capital
Traditional reinsurance capital is at very strong levels and growing. Despite ongoing geopolitical and macroeconomic uncertainty, this weight of capital is expected to increase competition and create greater impetus for reinsurers to pursue
strategic M&A as a positive lever to enhance scale, capabilities and growth alongside organic initiatives.
Further consolidation of the sector is a predictable consequence, with deals likely to be concentrated at the smaller end of the market, particularly where there is longstanding private equity ownership interest.
At the same time, various structural factors impact the pool of existing reinsurance premium. These include higher retention levels, captive formation, insurer consolidation and the growing penetration of third-party capital, which continues to put competitive pressure on traditional reinsurers,providing capacity at favorable terms.
Third-party capital is also an enabler – it allows insurers and reinsurers to expand the scope of risks they can write.
Turning resilience into profitable growth With a widening pool of capital seeking growth opportunities, the reinsurance industry has a significant opportunity to address unmet client needs, large pools of underinsured and uninsured risk, and emerging exposures around the world.
From climate to casualty, and AI to an aging population, these shifts are creating new insurable assets, new concentrations of risk and new product needs, essentially opening potential new markets.
Take technology. The growing relevance of data, cloud services and AI is fueling a digital infrastructure development, with some $5 to $10 trillion of investment expected in data centers alone by 2030.
This has the potential to generate cumulative premiums of more than $100 billion in the same period.
Similarly, evolving regulatory and litigation landscapes are contributing to growing demand for liability insurance: A recent study by Aon estimated that emerging risks in the casualty sector could contribute approximately $5 billion of reinsurance premium annually.
In a world in which risk and uncertainty is growing, businesses and governments look to insurers for solutions. Insurers can stay competitive and remain relevant to customers by leveraging attractively priced and diverse capital as well as revisiting longterm strategies and product mix to support growth and optimize protection.
Building best-in-class strategies – from capital deployment and talent to distribution focus and underwriting innovation – is essential for thriving in today’s attractive, yet dynamic market.