A new report from S&P Global Ratings states that the ongoing Middle East war will not have a major impact on global reinsurers, considering that they have limited direct asset exposure in the region.
The report mentions that the global reinsurance industry entered 2026 in a position of considerable capital strength, supported by strong underwriting performance and robust investment income. S&P believes that the direct asset exposure of global reinsurers to the Middle East remains limited, and reinsurers' capital adequacy is strong enough to mitigate the potential risk of credit quality deterioration stemming from the conflict.
Furthermore, the rating agency said that the asset exposure to the region is not material for the top 19 global reinsurers that it rates, but on the liability side, reinsurers face potential losses affecting their earnings. The conflict disproportionately affects specialty lines, a segment that insures complex or high-risk exposures, including war risk, aviation, energy, political violence, and other niche classes. These lines are more directly tied to the types of events unfolding in the region, increasing the likelihood of significant claims activity.
Where reinsurers could be hit?
S&P believes there will be sizable insured losses, and the conflict could have far-reaching implications for the reinsurance industry. However, the ultimate magnitude and impact on the reinsurance sector remains highly uncertain at this point and will depend largely on the duration, scale, and evolution of the conflict. Given how fluid the situation is, the loss development could unfold over weeks or even months.
At this stage, it sees several reinsurance lines exposed to increased volatility and potential losses, including specialty classes such as marine, aviation, energy, political violence, terrorism and cyber, as well as property exposure in affected areas and policies covering supply chain or trade disruption. Marine insurers have already begun canceling war-risk coverage applicable to the conflict zone, including the Persian Gulf and adjacent waters. Reinsurers with broad geographic footprints and meaningful exposure to specialty markets in the Middle East are those most likely to be affected.
Capital adequacy continues to buffer global reinsurers from severe stress events
The global reinsurance sector entered 2026 with robust capitalisation that has been strengthening further, extending its long-standing trend of strong balance-sheet resilience. Capital adequacy has consistently been one of the sector’s core strengths. S&P’s highest capital adequacy stress scenario revealed that the top 19 global reinsurers had an 11% capital redundancy in aggregate at year-end 2024. The rating agency expects the industry to have further improved its capital redundancy through year-end 2025.
S&P believes that capital adequacy will remain a key strength of the sector and continue to demonstrate resilience under severe stress scenarios, including geopolitical shocks such as the present conflict. According to Aon, global reinsurance capital reached a record $760bn as on 30 September, 2025, with growth across both traditional and alternative capital sources. S&P expects this figure to rise further once full-year 2025 results are reported.