Insurers achieved favourable outcomes at the 1 January property renewals on the back of excess capacity in the market and stable demand, says Aon in its "Reinsurance Market Dynamics January 2026 Renewal" report.
Competition was intense and widespread as reinsurers sought to grow and demonstrate their relevance, while third-party capital markets continue to expand and broaden their appetite. As a result, insurers were able to achieve significant decreases in pricing and improved terms at renewal
Competition was particularly fierce in the US property catastrophe market, with preferred risks typically achieving strong double-digit rate reductions at 1 January. Property renewals in EMEA, Latin America and Asia Pacific also saw double-digit discounts for non-loss impacted accounts with few exceptions.
Additional solutions
While insurers were broadly comfortable with current levels of protection at 1 January, many are likely to explore additional solutions to strengthen capital positions and support profitable growth initiatives. There is growing interest in bespoke transactions such as structured solutions, loss portfolio transfers and facultative reinsurance, including hybrid treaty/facultative facilities.
Global reinsurer capital reached a new high of $760bn at the end of September 2025, according to Aon. This figure is $45bn higher than that recorded at the end of 2024. The increase was driven by reinsurers’ retained earnings and record levels of third-party capital.
The report also noted that, despite total industry insured losses from natural catastrophes exceeding $100bn for the sixth consecutive year, reinsurers are expected to post strong results in 2025. The reinsurance sector posted an average annualised return on equity of 16% for the first nine months of 2025, well above the average cost of equity.
Third-party capital hit a record $124bn by the end of the third quarter of 2025 up by $9bn from the close of 2024. The catastrophe bond market also reached a new peak, with over $24bn issued across 74 sponsors and $59bn in outstanding catastrophe bonds.
This record capital is expected to fuel growth in emerging risk protection. For example, the projected $5–10tn investment in data centres by 2030 will require substantial insurance capacity, with potential cumulative premiums surpassing $100bn over the same period.
2026
Aon anticipates 2026 to be another year of growth for third-party capital as investors demonstrate a consistent appetite for catastrophe bonds and sidecars. New capital sources continue to enter the market, with large alternative asset managers, such as Blackstone and Brookfield, having recently emerged as active participants in the property and casualty industry. Such firms increasingly see reinsurance as a source of non-correlating insurance product that, coupled with investment returns, can support fast-growing private debt strategies, often with lower return hurdles than private equity.