Demand for facultative reinsurance across Australia and New Zealand remained strong through the 2025 mid-year renewal period, according to insights from Aon. Amid an environment of increasing competition and surplus capacity, market conditions shifted in favor of buyers.
Aon noted that the property reinsurance segment saw stable renewals across key catastrophe lines. Approximately 95% of property catastrophe reinsurance programs in the region renewed at mid-year.
Available capacity was more than sufficient to meet demand, with reinsurers deploying capital on favorable terms for cedents. Market participants reported that pricing and structures were generally steady, though some differentiation occurred based on individual risk profiles and loss histories.
Despite the strong demand, the availability of capital from reinsurers remained high, contributing to a competitive pricing environment. Aon said mid-year renewals resulted in material negotiation leverage for buyers, particularly those with consistent loss experience and clear underwriting strategies. The volume of capacity entering the market led to more flexible terms for certain property layers.
Data from last year indicated that around 80% of Australia and New Zealand’s property catastrophe reinsurance programs were completed during the mid-year cycle. Notable placements included the renewal of New Zealand’s EQC Toka Tū Ake scheme.
Capacity conditions also improved year-over-year. Aon reported that even lower layers of catastrophe programs, which had faced constraints in prior cycles, saw increased support in 2025.
Reinsurers demonstrated greater willingness to write business across the tower, including more challenging segments, contributing to broader and more secure program structures for cedents.
Aon added that 2025’s mid-year period continued a broader trend of balanced reinsurance market dynamics across Australia and New Zealand. While reinsurers maintained discipline, they also demonstrated an increased willingness to work with buyers on structuring coverage to reflect current exposures and risk appetites.
This dynamic was particularly evident in catastrophe reinsurance placements, which benefited from ongoing capital flows and relatively moderate regional catastrophe losses in recent years.
Facultative reinsurance also reflected these market conditions. Buyers encountered stable pricing at mid-year, with placements generally executed without significant changes in terms or exclusions.
Aon noted that this segment was clearly a buyer’s market, with reinsurers maintaining capacity while showing flexibility in meeting the needs of cedents. Carriers with a consistent risk profile and a clear narrative around exposure management were better positioned to benefit from competitive facultative terms.
Global reinsurer capital rose to US$720 billion in Q1 2025, up from $715 billion the year prior. Both traditional and alternative capital sources contributed to this growth, with increased investor appetite and favorable returns bolstering reinsurer capacity. The expansion of capital played a direct role in softening market conditions, particularly for catastrophe-focused programs.
Catastrophe bond issuance further supported capacity, with the first half of 2025 reaching a record US$16.8 billion in total new issuance. This included two individual deals exceeding US$1.5 billion each.
The strong flow of capital into insurance-linked securities reinforced broader reinsurance market dynamics, helping stabilize pricing and absorb demand from peak zones in Australia and New Zealand.
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