An expanding pool of reinsurance capital entering the January 1, 2026, renewal accelerated pricing declines across multiple lines, with reinsurers posting returns near 17% and reporting a reduced share of global catastrophe losses.
Guy Carpenter said dedicated reinsurance capital grew by about 9% in 2025, supported by retained earnings and continued participation from alternative capital, contributing to excess capacity across the market.
The broker estimated reinsurer return on equity at roughly 17% for the year, aided by structural changes introduced since January 1, 2023, that lowered reinsurers’ participation in catastrophe losses. Total insured catastrophe losses for 2025 were estimated at $121 billion, about 18% below the five-year inflation-adjusted average, while the reinsured share declined to about 11%, compared with roughly 20% before the market shift.
Other brokers reported similar capital dynamics. Gallagher Re said global reinsurance capital is expected to reach record levels by year-end 2025, supported by growth in both traditional and alternative capital, while noting that most insurers and reinsurers remain in strong financial condition following several years of underwriting and pricing adjustments. Aon reported that global reinsurance capital reached about $735 billion by June 30, 2025, driven largely by retained and redeployed earnings, with alternative capital at an all-time high.
Against this backdrop, property reinsurance buyers gained leverage at the January 1 renewal. Guy Carpenter reported double-digit risk-adjusted rate reductions on non-loss-impacted property catastrophe programs, with demand for additional catastrophe limit rising by an estimated 5% to 10%. Gallagher Re and Howden both said abundant capital outpaced demand, resulting in property pricing declines of about 10% to 20%. Howden reported a 14.7% drop in global property catastrophe placements and a 16.5% decline in property retrocession pricing, returning rates to levels last seen about four years earlier.
Capital markets capacity added further competitive pressure. Guy Carpenter said catastrophe bond issuance continued at record levels in 2025, with total outstanding notional limit exceeding $58 billion and 15 first-time sponsors entering the market. Aon reported that catastrophe bond volume rose sharply year over year, contributing to strong alternative capital supply and supporting softer property and cyber pricing.
Casualty renewals were more differentiated. Guy Carpenter described generally stable outcomes, with some improvement on proportional structures supported by disciplined portfolio management. Gallagher Re said casualty discussions remained influenced by litigation trends and loss development in the US, though many cedents renewed flat. Sidecars continued to gain traction, particularly for longer-tail casualty portfolios, consistent with Aon’s observation that sidecars are becoming a growing source of proportional capacity.
Cyber reinsurance continued to move toward event-based, risk-specific and hybrid treaty designs, while buyers increased use of non-proportional structures to address accumulation and volatility.
Across brokers, the common theme was that record capital levels, lower ceded catastrophe losses and sustained reinsurer profitability shifted negotiating leverage toward buyers, setting the tone for pricing and structural outcomes heading into 2026.
