The global reinsurance industry performed well in 2025, with profitability and capital reaching unprecedented levels, according to Gallagher Re’s full-year reinsurance market report.
Total specialized reinsurance capital rose to a record $648 billion, up 11% from 2024 and the second strongest year for capital growth in more than a decade.
According to Gallagher Re, the expansion was driven by retained earnings on traditional reinsurance balance sheets and historic inflows of non-life alternative capital.
Gallagher Re’s Reinsurance Composite Index tracks the world’s leading reinsurance companies with a return on equity (ROE) of 19.3% in 2025.
The result was supported by strong underlying earnings and relatively mild natural disaster activity, making it one of the highest ROEs observed since the report was released.
Michael van Wegen, international head of global strategic consulting at Gallagher Re, commented: “2025 was a landmark year for the reinsurance industry, with reinsurers achieving historic levels of profitability and capital growth.”
Looking ahead, Gallagher Re said it expects returns to be modest, with a projected consolidated return on equity of 14-15% in 2026.
The forecast assumes normalization of natural catastrophe losses and continued contributions from realized capital gains and reserve releases.
Meanwhile, growth in traditional reinsurance capital is expected to slow to around 4%, although the industry is likely to continue to accumulate excess capital.
Gallagher Re observed that as market conditions weaken, this dynamic may create increasing challenges in capital deployment.
van Wegen concluded: “While the reinsurance industry has enjoyed exceptional returns over the years, supply and demand dynamics have shifted in favor of buyers, as evidenced by the softening of rates during the January 1 and April 1 renewal periods.
“Nonetheless, the industry remains resilient and profitability is expected to remain well above the cost of equity in 2026.”