Global reinsurer capital rose almost 10% in 2025 to a record $785 bn, according to Aon, as strong earnings, bond gains and fresh inflows gave the market more capacity to absorb expanding risks.
In its April report, Aon said the industry added roughly $70 bn of capital over the year. The increase came from retained earnings, mark-to-market gains on bonds booked directly to equity, and new money flowing into sidecars and catastrophe bonds.
Traditional capital climbed more than 8%, or $49 bn, to a record $649 bn. Aon said the increase was driven mainly by strong retained earnings after a third straight year of solid underwriting results. Reinsurers posted an ROE of 17% in 2025, roughly double the cost of equity.
Underwriting performance stayed firm. Across 18 companies surveyed by Aon, the average reinsurance-specific combined ratio improved to 88.5% in 2025, down from 90.1% in 2024 and 90.7% in 2023. Investment income also kept supporting earnings.
Record capital levels and easing conditions in the retrocession market are increasing competition at the 2026 renewals.
So far, the main improvement for buyers has come through lower prices from previously elevated levels. Underlying terms are coming under more pressure too, though most structures remain broadly intact.
Alternative capital also reached a new peak. Aon estimates third-party reinsurance capital rose more than 18% year on year to $136 bn in 2025, helped by strong returns and continued investor appetite for non-correlating risk.
Global reinsurance capital, 2016-2025
The broker said growth in that segment was driven by unusually strong demand from buyers, who wanted both more total reinsurance limit and a larger share of that limit placed with third-party capital.
Investors were willing to meet the demand after several years of strong returns, using capital freed up from catastrophe bond maturities and earned coupons, while also adding fresh inflows.
Mike Van Slooten, Head of Market Analysis Reinsurance at Aon, said renewal outcomes this year are positioning most reinsurers to earn above their cost of capital in 2026, assuming ceded losses stay within expected ranges.
He also said geopolitical tension and capital market volatility are adding more uncertainty to the outlook.
Aon expects catastrophe bonds and broader third-party capital activity to stay strong, supported by healthy investor demand, the recycling of maturing limit and attractive returns.
Richard Pennay, chief executive of Aon Securities, said the firm expects that momentum to continue and added that Aon Securities recently passed $100 bn raised over the past 25 years. That says plenty about where the market is now. Bigger, deeper, more competitive.
