Reinsurers Attract Capital as Cat Bonds Surge and Losses Stabilize

Strong performance in the reinsurance sector continues to attract capital, helping to stabilize rates and support favorable outcomes for clients, according to a July 1 report from Guy Carpenter.

Despite global economic volatility and insured losses approaching $70 billion in the first half of 2025, reinsurer returns remain resilient. The first-quarter surge in insured losses, largely driven by the $40 billion Los Angeles wildfires, moderated in the second quarter. Total insured losses are now in line with the inflation-adjusted 5-year average.

Reinsurer balance sheets remain strong, with capital reaching a record $607 billion at year-end 2024. Guy Carpenter projects capital growth of 5 to 7 percent by the end of 2025 and expects returns on equity to reach 15 percent this year, following 16 percent in 2024. "The current trading environment is one of the most favorable for reinsurers in many years," Dean Klisura, president and CEO of Guy Carpenter, said.

As a result, reinsurers were able to absorb a 5 to 7 percent increase in client demand for property catastrophe coverage. Capacity exceeded demand by more than 20 percent, which led to risk-adjusted rate decreases of 5 to 15 percent for non-loss-impacted programs. Programs affected by losses saw rate increases of 10 to 20 percent.

Casualty reinsurance also showed signs of stabilization. Flat to slightly reduced ceding commissions were seen on proportional placements following nearly 2 years of cuts. Improved underwriting by insurers and reinsurers' efforts to balance client portfolios across property, casualty, and specialty lines contributed to the steady environment. Excess of loss placements continued to see upward pricing pressure, with rates rising 10 to 20 percent, depending on portfolio specifics.

The catastrophe (cat) bond market remains highly active, offering additional capacity. Approximately $17 billion in limit was placed through 56 property catastrophe bonds and 1 health catastrophe bond in the first half of 2025. GC Securities led with 23 bonds placed—the most by any broker to date.

Reinsurance market data is available through Guy Carpenter's Renewal Resource Center.