According to Guy Carpenter’s January 2026 update, dedicated reinsurance capital is expected to grow around 9% in 2025 to $660 billion, driven by 10% growth in alternative capital.
Guy Carpenter President and CEO Dean Klisura explained that this capital growth was supported by underwriting profits, retained earnings, asset value recovery and strong investor interest, particularly in alternative capital and catastrophe bonds.
He added that trade tensions had not affected capital flows and reinsurance markets continued to “function well.”
Guy Carpenter’s report also predicts $50 billion in additional capital between 2025 and 2027.
Retained earnings will help support traditional capital growth as catastrophe insured losses reportedly total $121 billion in 2025, 18% below the five-year inflation-adjusted average, thanks to a good U.S. wind season.
Guy Carpenter highlighted that rate and attachment point adjustments since January 1, 2023 have created a new paradigm, reducing the reinsurance share of catastrophe losses from 20% (2022 and before) to a new average of 12%.
These factors contributed to a return on equity of 17%, based on the company’s reinsurer composite measure.
Looking ahead, further declines in interest rates and bond yields are likely to spur further growth in alternative capital as its relatively uncorrelated return potential becomes more attractive.
Klisura added, “Sidecars remain an important trend across multiple business sectors, although they have received particular attention in long-tail portfolios.
“This is part of a larger trend in which insurance companies seek additional sources of capabilities from capital markets, while investors target direct exposure to insurance risks to deploy active investment strategies.”