Reinsurers Slash Rates as Capital Hits Record $760 Billion Globally

Global reinsurer capital reached a record $760 billion by September 30, 2025, according to Aon's upcoming Reinsurance Market Dynamics January 2026 Renewal report, fueled largely by strong retained earnings and subdued catastrophe activity. The report outlines how this surge in capital, combined with a benign Atlantic hurricane season, intensified competition among reinsurers and drove double-digit rate reductions for many insurers at the January 1 renewal. 

Preferred risks in the US market typically saw double-digit decreases in pricing. Similar reductions occurred across Europe and Latin America, with rate cuts nearing 20 percent for non-loss-impacted accounts in Asia Pacific. 

The reinsurance sector reported an average annualized return on equity of 16 percent for the first 9 months of 2025, well above the cost of equity. Third-party capital also rose to a new high of $124 billion, up $9 billion from the prior year, while the catastrophe bond market reached $58 billion in outstanding bonds and over $24 billion in new issuance across 74 sponsors. Sidecar structures grew throughout the year, aided by new investors, new risk vehicles, and fresh capacity. 

Insurers are expected to reinvest premium savings into additional reinsurance solutions to strengthen earnings protection and fund profitable growth initiatives. The report highlights that insurers increasingly turned to facultative reinsurance as a flexible and complementary tool for de-risking portfolios and pursuing expansion. That segment is expected to continue growing in 2026. 

Property reinsurance saw notable pricing improvements and better terms at January renewals, driven by reinsurers' growing appetite for risks that were previously viewed as marginal. In casualty lines, buyers also benefited from increased capacity and competitive pricing, particularly in international markets. In the United States, despite a difficult tort environment, casualty insurers remained well-positioned due to strong primary results and favorable investment returns. 

Alfonso Valera, international CEO for reinsurance solutions at Aon, said, "Buyers returning to the market will find a wide range of complementary reinsurance and capital products. Frequency covers and earnings protection are increasingly available. We are seeing growing interest in bespoke transactions such as structured solutions, loss portfolio transfers and facultative reinsurance, including hybrid treaty/facultative facilities." 

Stephen Hofmann, Americas CEO for reinsurance solutions at Aon, said, "In a world in which risk and uncertainty are growing, businesses and governments look to insurers for solutions. Insurers can stay competitive and remain relevant to customers by leveraging attractively priced, diverse capital as well as revisiting their long-term strategy and product mix to support growth and optimize protection. Building best-in-class strategies—from capital deployment and talent to distribution focus and underwriting innovation—is essential for thriving in today's attractive, yet dynamic market." 

The report also points to long-term opportunities emerging from growth in sectors such as data infrastructure. Aon estimates that $5 trillion to $10 trillion in data center investment by 2030 could drive over $100 billion in cumulative premiums. Meanwhile, shifting regulatory and litigation environments may lead to greater demand for liability coverage, with emerging casualty risks potentially adding $5 billion in annual reinsurance premium.