Record Reinsurance Capital Drives Competitive Midyear Renewals, Says Aon

Aon has released its Reinsurance Market Dynamics Midyear 2025 Renewal report, offering an analysis of the global reinsurance market during the June and July 2025 renewals. According to Aon, the June and July renewals—key for the United States, Latin America, Australia, and New Zealand—were marked by competitive conditions as reinsurers sought market share, despite significant natural catastrophe losses in the first half of the year, including the $40 billion California wildfires. Industry capital grew to $720 billion in the first quarter of 2025, driven largely by retained earnings of established reinsurers. This capital surplus contributed to a competitive market, with reinsurers, insurance-linked securities markets, and new entrants seeking to deploy capacity and gain market share. 

Per the report, midyear renewals saw acceleration in buyer-friendly conditions. Reinsurers offered greater flexibility in terms and conditions and provided opportunities for insurers to expand coverage. While pricing generally moderated, outcomes varied depending on loss experience and program performance, reflecting a differentiated approach from reinsurers. 

According to Aon, catastrophe bond issuance reached a record $16.8 billion in the first half of 2025. This included the two largest transactions in the history of the catastrophe bond market, each exceeding $1.5 billion. The alternative capital market's growth contributed to abundant capacity, supporting insurers' efforts to manage volatility and secure protection. 

The report highlights that US property catastrophe placements achieved low double-digit risk-adjusted rate reductions for loss-free accounts. In contrast, loss-affected accounts faced flat or increased pricing at renewal. Aon said that the transfer of policies from Florida's Citizens Property Insurance Corporation was a key factor behind increased demand for reinsurance limits at midyear. 

Per Aon, the casualty reinsurance market remained stable overall, with reinsurers supporting well-performing programs while remaining cautious about sectors impacted by nuclear verdicts, adverse development, and emerging risks. Despite some reinsurers reducing capacity for parts of the US casualty market, others increased their participation, maintaining overall capacity levels. 

Aon reported that reinsurance capacity was more than sufficient to meet growing demand globally, especially in the property catastrophe sector. Reinsurers showed greater willingness to provide protection lower down in programs, and competition was most intense in middle layers, where premium growth opportunities were seen. 

According to Aon, insurers are increasingly exploring structured solutions and alternative products such as parametric and catastrophe bonds. These tools are being used to address volatility, manage earnings, and build additional limits in an evolving risk environment.