Reinsurance Capital Surpasses Demand at 2025 Mid-Year Renewals: Aon

According to Aon, global reinsurance capital exceeded demand during the 2025 mid-year renewals, creating a more favourable and competitive landscape for insurance buyers. The broker also highlighted that insurance-linked securities (ILS) capital remained steady at $115 billion by the end of Q1 2025, reflecting the continued strength of alternative capital sources.

Aon noted that the June 1 and July 1 renewal dates are particularly significant for markets in the U.S., Latin America, Australia, and New Zealand, coinciding with the start of the Atlantic hurricane season. Despite a busy first half for natural catastrophe losses, reinsurers, ILS providers, and new players were eager to deploy capital and increase market share, which contributed to a broadly competitive renewal environment.

Global reinsurer capital rose by $5 billion in Q1 2025, reaching $720 billion, surpassing the previous record of $715 billion set in 2024, despite the financial strain from the California wildfires. Aon attributed this growth mainly to strong retained earnings, with nearly two-thirds of reinsurers achieving double-digit annualised returns on equity.

The catastrophe bond market also reached historic levels in the first half of 2025, marked by record-breaking issuances. In May, Florida’s Citizens Property Insurance Corporation secured a then-record $1.525 billion of reinsurance through its Everglades Re II Ltd. (Series 2025-1) transaction. Later that month, State Farm achieved a new milestone by securing $1.55 billion of multi-peril coverage in a single placement through four Merna Re (Series 2025) catastrophe bonds.

Additionally, Aon reported that reinsurance capacity comfortably met a nearly 10% increase in global demand for property catastrophe limits. This surge was largely driven by U.S. insurers, particularly following the significant reduction in policyholders from Florida’s Citizens Property Insurance. Contributing factors included inflation, updated catastrophe modelling, and reassessments of natural disaster risks, especially after recent wildfires in the U.S. and floods in Brazil.

Aon further estimated that global reinsurer equity grew by $5 billion in Q1 2025, reaching $605 billion, continuing the sector’s recovery since 2022. The growth was supported by strong earnings, the market correction in 2023, and the reversal of unrealised losses on fixed-income investments, although it was partially offset by increased capital returns to shareholders.

Finally, Aon emphasized that alternative capital remains robust at a record $115 billion, with favourable market conditions encouraging both existing investors to reinvest and new participants to enter the market.