The global reinsurance industry is entering 2026 with strong capitalization and steady earnings, according to insights from EY.
Industry capital has increased by more than 30% since 2015 and over 13% since 2020, supported by profitability, higher attachment points, and improved contract terms. Several major reinsurers reported year-over-year net income growth in the first half of 2025, despite ongoing inflation, market volatility, and notable catastrophe losses.
Wildfires have become a larger share of natural catastrophe claims, rising from 1% before 2015 to about 7% over the past decade. Eight of the 10 most expensive wildfire events on record have occurred in the last 10 years. In 2024, secondary perils contributed significantly to insured losses, further shaping the risk landscape.
Regional differences remain pronounced, EY noted. The United States continues to lead in global insured losses, driven by hurricanes and wildfires, while social inflation is a persistent concern.
The number of “nuclear verdicts” exceeding US$10 million increased from 89 to 135 year over year, and verdicts above US$100 million rose from 27 to 49. Europe is contending with geopolitical pressures and regulatory fragmentation, but demand for reinsurance remains steady. In Asia-Pacific, renewal discipline persists and demand for catastrophe protection is on the rise.
These developments are occurring as the reinsurance sector’s capital position reaches new heights. Aon reports that global reinsurance capital stood at approximately US$735 billion as of June 30, a record level fueled by retained and redeployed earnings in both traditional and alternative capital segments.
Alternative capital alone hit US$121 billion, and catastrophe bond volume climbed to US$54 billion, nearly 20% higher than the previous year. This surge in capital is enhancing the industry’s ability to absorb risk and support broader coverage, even as loss activity remains elevated.
The influx of capital has also shifted the market environment in favor of buyers. According to Aon, the 2025 renewal season has featured greater flexibility in terms and conditions, along with expanded coverage options.
Competitive dynamics were especially evident during the June and July renewals, which are key for regions including the US, Latin America, Australia, and New Zealand. As a result, insurers have been able to secure capital on more favorable terms, supporting growth and portfolio management.
Competition is increasing as capacity grows, leading to selective softening in the market. Loss-free property catastrophe placements have seen softening of 10% to 15%, and a significant portion of buyers expect premium reductions in 2025.
Alternative capital now represents about 17% of global reinsurance capital, an increase of 33% since 2020 and 68% since 2015. Catastrophe bond issuance reached US$17.6 billion in the first half of 2025, setting new records and positioning the market for a potential full-year high.
EY reports that investor expectations are shifting toward quality of earnings, with a focus on disciplined underwriting and avoiding cyclical missteps such as underpricing. Reinsurers are expected to maintain clear communication regarding capital deployment, risk appetite, and areas of targeted growth.
Cycle management is a growing priority as the market transitions. Firms are emphasizing rate adequacy, loss cost trends, social inflation, retrocession pricing, and catastrophe modeling to better manage portfolios.
Leadership is also exploring innovation through structured transactions, advisory services, and third-party capital strategies, each with distinct risk and reward profiles.
Technology and talent development are central to the sector’s future, according to EY. Reinsurers are increasing investment in AI, data platforms, and cloud-based systems to enhance underwriting, pricing, and claims.
Talent shortages, especially in data science and AI, are a challenge as about half the workforce is projected to retire within 15 years. EY research indicates that human-centric transformation can improve the likelihood of successful change by 2.6 times.
