Aon’s Mike Van Slooten has suggested the reinsurance market will become “more flexible” in 2027 as global reinsurer capital reaches a record $800 billion, with strong sector profitability continuing to support capacity and giving buyers greater scope to reassess their programmes.
Van Slooten, Head of Market Analysis, Reinsurance at Aon, made the comments during an Aon briefing for clients and media ahead of the 2026 Monte Carlo Rendez-Vous, where he was joined by colleagues from across the firm to discuss reinsurance market conditions, capital and the outlook for the upcoming renewal season.
According to the executive, reinsurers have “generally performed well” again so far in 2026, and most remain on course for a fourth consecutive year of strong earnings.
Van Slooten observed that arket softening is already constraining reported business volumes, but underwriting results have benefited from relatively low ceded loss activity, particularly compared with last year, which was impacted by the California wildfires.
He added, “In our analysis, we saw an average reinsurance-specific combined ratio of just over 85% across the companies we track in the first half of 2026, which is roughly a 10-point improvement relative to last year.
“In fact, the average reinsurance-specific combined ratio has tracked at around 90% since the hard market reset in 2023, aided by relatively low primary peril losses across that period.
“Another thing that’s changed over the last few years is that investment income has become a much more significant contributor to overall earnings since 2023, as a consequence of a much more supportive interest rate environment.
“We did see capital market volatility linked to the Middle East conflict in the first quarter, and that did impact asset values to some extent in the first half. That certainly remains a topic to watch going forward.
“This is obviously an ongoing situation, but for most reinsurers, reinvestment yields were once again higher than book yields at the end of June, and that is a positive for future investment returns.”
Overall, on an annualised basis, Van Slooten noted that return on equity for the sector averaged 15.5% in the first half of 2026, continuing the kind of performance seen since 2023.
Van Slooten continued, “At this level, sector earnings are comfortably exceeding the average cost of capital. We would expect that to be the case also in 2027, absent very unusual events.
“Recent profitability has driven the availability of reinsurance capacity to new heights. Aon’s estimate of global reinsurer capital has increased by $15 billion to $800 billion over the six months to June 30, with both traditional equity and third-party capital at record levels.
“Importantly, we also see a broadening of the investor pool, which is further expanding the market’s ability to take on risk at favourable terms.”
The executive concluded, “So, overall, to sum the situation up, I think we are clearly, based on those conditions, expecting to see a more flexible reinsurance marketplace in 2027.
“That really gives buyers the opportunity to review their current strategies, and forward-thinking reinsurers the opportunity to demonstrate increased relevance in today’s challenging risk environment.”
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