Reinsurers have posted strong results over the past decade, with total shareholder returns (TSR) reaching 14% for the 10 years ending Dec. 31, 2024, according to Boston Consulting Group (BCG).
For the five-year period from 2020 to 2024, TSR was nearly 13%. These figures indicate that reinsurance has outperformed the broader insurance industry and many other sectors, particularly over the longer horizon.
However, BCG notes that while reinsurers have enjoyed a period of strong performance, the outlook suggests that the sector may face a more challenging road in the years ahead.
The primary driver of TSR for both reinsurance and the overall insurance industry during the ten-year period was cash returned to shareholders through dividends and share buybacks.
Over the five-year period, growth in tangible book value (TBV) and multiple expansion contributed equally alongside cash flow. However, reinsurers’ TBV growth has lagged behind the property and casualty sector in both timeframes.
A robust pricing cycle has supported the upward trend in TSR for reinsurers in recent years. While primary insurers’ profitability has remained relatively stable, reinsurers have seen an increase in profitability.
BCG highlights that not all reinsurers have consistently operated at or above their cost of equity, and the sector continues to report lower returns on tangible equity (RoTE) compared to primary insurers.
According to Gallagher Re, global reinsurer capital rose 5.4% in 2024 to $769 billion, supported by strong retained earnings, improved underwriting profitability, and increased recurring investment income. The reported return on equity (ROE) for a subset of reinsurers rose to 17% in 2024, with underlying ROE at 13.9%.
Gallagher Re projects that, assuming normal catastrophe activity and stable investment markets, underlying ROE could reach 15% in 2025. The report also notes that among a group of 16 reinsurers, the underlying ROE declined to 12.6% at mid-year 2025, compared to 15.2% the previous year, while headline ROE remained at 17.7%, still above the average cost of capital.
According to BCG, size has played a significant role in risk-return performance, with companies such as Munich Re, Arch Capital, and Hannover Re delivering the highest shareholder returns and best risk-return profiles over the past ten years.
Within reinsurance subsegments, property and casualty reinsurers have faced relatively low RoTE due to low underwriting margins and high capital intensity, while life and health reinsurers have struggled with negative underwriting margins driven by loss ratios.
The balanced contributions of cash flow, TBV growth, and multiple expansion to TSR are notable, but BCG points out that the sustainability of TBV growth is a key concern as pricing conditions begin to soften. Relying primarily on dividends and share buybacks to support TSR may not be sustainable in the long term, especially if market conditions deteriorate.
Looking ahead, BCG suggests that reinsurers will need to focus on smart risk selection and pricing discipline to maintain profitable growth amid rising catastrophic weather events and increasing geopolitical and economic uncertainty. Management teams will be challenged to deliver results as the market environment evolves.
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