A surge of capital from private credit firms is prompting reinsurers to take on riskier business through less regulated intermediaries, according to several industry executives.
At the Financial Times/PwC Insurance Summit in Bermuda, Kevin O’Donnell, chief executive of RenaissanceRe, said, “We’re seeing private credit, specifically, being much more aggressive - shifting their focus from the life sector, looking more at casualty.”
He noted that private credit entities, which are not regulated reinsurance companies, can operate with more leverage and a different investment appetite, creating what he described as “an arbitrage between the restrictions we have in our investments, and the freedom that they have on theirs.”
Traditionally, life insurance has been a more natural fit for the illiquid loans favored by private capital groups such as Apollo Global Management, KKR, and Blackstone. However, these firms are now expanding into property and casualty insurance, which typically involves shorter-term policies.
Scott Egan, chief executive of reinsurer SiriusPoint, urged caution regarding rapid growth in casualty. He pointed out that the sector has recently faced multibillion-dollar losses from large US lawsuits. Egan warned, “We won’t know the cost of manufacture for years,” highlighting the long-tail nature of casualty insurance.
This influx of private capital is reshaping the broader reinsurance sector as 2025 draws to a close. Moody’s Ratings recently shifted its outlook for the global reinsurance industry from positive to stable, citing strong capitalization but also early signs of softening rates and some loosening of policy terms, especially in property and casualty lines.
Analysts at Moody’s noted that while the sector’s combined ratio improved to 86% in 2023, further gains are expected to be more muted as pricing momentum slows and new complexities emerge in the market.
The changing landscape is also being shaped by a surge in alternative capital. Moody’s highlighted that catastrophe bond issuance reached record highs in 2024, and insurance-linked securities now account for over US$100 billion of global reinsurance capacity.
This increase in alternative capital has intensified competition, influencing both pricing and underwriting standards across the sector.
Industry participants have observed that private capital groups’ investment priorities are starting to influence underwriting strategies. One executive warned this could result in “the tail wagging the dog.” According to broker Aon, alternative capital groups, including private credit and hedge funds, had built US$115 billion of exposure to property and casualty reinsurance as of last year.
The influx of capital has contributed to lower reinsurance prices, even as risks from global threats such as climate change and cyberattacks increase. Lower prices have led insurers to pursue new business more aggressively, often through managing general agents (MGAs), which sell coverage on behalf of other insurers that assume the risk and handle claims.
Premiums written by MGAs more than doubled over the past five years, reaching about US$114 billion in 2024, according to Conning Asset Management. Senior industry figures have cautioned that heightened competition for new business could push MGAs to take on excessive risk at inadequate prices.
Unlike traditional insurance carriers, MGAs are not subject to the same solvency and regulatory requirements because they pass risk to other insurers and, ultimately, to investors such as private capital groups. MGAs earn fees for originating policies but do not hold balance sheets, making them attractive takeover targets for private equity firms.
Reinsurers have warned that this pass-through structure offers MGAs little incentive for diligent underwriting, in contrast to traditional insurers that retain most of the risk they originate.
“Valuations around MGAs are just astronomical,” said Maamoun Rajeh, president of Arch Capital. He added, “The minute you disconnect underwriting discipline from growth, volume and fees, you get into an environment that accelerates this lack of discipline.”
