According to brokerage Aon Group, global reinsurance capital will grow nearly 10% in 2025, reaching a record $785 billion by the end of the year, with both traditional equities and alternative capital hitting new highs, providing the industry with ample room to absorb growing risks.
The broker has released its April 2026 update of its Reinsurance Market Dynamics report, which examines the record levels of capacity available in the market to address expanding risk management challenges.
Aon attributes year-over-year global reinsurer capital growth of nearly 10%, or $70 billion, in 2025 to strong retained earnings, additional mark-to-market earnings from bonds credited directly to equity, and new inflows supporting sidecar and cat bonds.
The brokerage estimates traditional capital will grow more than 8%, or $49 billion, in 2025 to a new high of $649 billion, driven primarily by strong retained earnings. The reinsurer delivered a third consecutive year of strong underwriting performance in 2025, supporting capital strength with an ROE of 17%, roughly double the cost of equity.
In fact, the average reinsurance-specific combined ratio for the 18 companies surveyed was 88.5% in 2025, down from 90.1% in 2024 and 90.7% in 2023. In addition, investment returns continue to provide a strong support for many companies’ overall earnings.
“Record capital levels and loose retrocession market conditions are intensifying competition for renewals in 2026. At this stage, buyer improvement is mainly limited to a reduction in high-end prices, with the infrastructure under increasing pressure but largely intact,” the broker explained.
Aon estimates that third-party, or alternative, reinsurance capital will hit a new high of $136 billion in 2025, up more than 18% year-on-year, as strong uncorrelated returns continue to attract new commitments and profit reinvestment.
“This growth has been driven by unprecedented demand from clients seeking to increase total reinsurance limits as well as a proportion of third-party capital limits. Investors have been pleased to meet this demand, delivering strong returns in recent years and being able to deploy capital from cat bond maturities and coupons earned, as well as further investment capital inflows,” Aon explained.
Mike Van Slooten, head of market analysis at Aon Re, commented: “Assuming ceded losses remain within forecasts, this year’s renewal results will see most reinsurers exceeding their cost of capital in 2026. That said, rising geopolitical tensions and capital market volatility create greater uncertainty.”
Richard Pennay, CEO of Aon Securities, said: “Looking ahead to the remainder of 2026, we expect the cat bond market and broader third-party capital activity to remain strong, driven by strong investor appetite, continued collection of maturity limits and attractive returns. Aon Securities is uniquely positioned to help our clients raise third-party capital as our capital recently exceeded $100 billion over the past 25 years.”
