Guy Carpenter expects dedicated reinsurance capital to grow about 9% in 2025, reaching roughly $660bn, according to its January 2026 renewal report.
The increase leans heavily on alternative capital, which the firm says should rise by around 10%. Traditional balance sheets still matter, but they’re no longer carrying the story alone.
Dean Klisura, Guy Carpenter’s president and chief executive, says the capital build reflects several forces moving in the same direction. Underwriting profits helped. Retained earnings stayed strong.
Asset values recovered. Investor appetite, especially for alternative structures and catastrophe bonds, remained steady.
Dedicated reinsurance capital, 2016-2025
According to him, trade tensions haven’t disrupted flows. The reinsurance market, he says, continues to function well.
The broker sees more capital coming. Guy Carpenter forecasts an additional $50bn entering the sector between 2025 and 2027. Not all at once. Gradual, but persistent.
In 2025, retained earnings supported traditional capital growth despite insured catastrophe losses of about $121bn. That figure sits roughly 18% below the five-year inflation-adjusted average, largely due to a calm U.S. wind season. Less loss leakage, more capital left standing.
Structural changes also reshaped outcomes. Guy Carpenter notes that rate increases and higher attachment points since Jan. 1, 2023, reset how risk flows through the system.
The reinsured share of catastrophe losses dropped from about 20% in 2022 and earlier to a new average near 12%. That shift alone altered return dynamics.
The payoff showed up in performance. The firm’s reinsurer composite posted returns on equity of roughly 17%. That level of profitability doesn’t usually go unnoticed by investors.
Looking ahead, Klisura points to interest rates. If rates and bond yields continue to ease, alternative capital could gain further traction. Its appeal sits partly in diversification.
Returns that don’t move in lockstep with broader markets tend to look better when fixed income cools off.
Innovation keeps pushing the edges. Klisura says sidecars remain a strong trend across multiple lines, with particular momentum in longer-tail portfolios. He frames this as part of a wider shift. Insurers are looking beyond their own balance sheets for capacity. Investors want direct access to insurance risk, structured in ways that support more active strategies.
Sidecars continue to be a significant trend across multiple lines of business, though they have gained particular attention for longer-tail portfolios.
Dean Klisura, Guy Carpenter’s president and CEO
“This is part of a larger trend in which insurance businesses seek additional sources of capacity from capital markets, and investors aim to get direct access to insurance risk in order to deploy proactive investment strategies,” Dean Klisura says.
According to Beinsure analysts, the message from Guy Carpenter is straightforward. Capital isn’t retreating.
It’s reorganising, leaning harder on structures that can move faster and absorb risk differently. The market has adjusted. Now it’s building on that adjustment.
