Aon's reinsurance market dynamics midyear 2025 renewal report reveals that the global reinsurance industry capital had increased to $720bn by the end of the Q1 of 2025 against $715bn over the same period in 2024.
The report reveals that despite an active first half for natural catastrophe losses, midyear renewals experienced a broadly competitive environment, as reinsurers, insurance-linked securities markets and new entrants sought to deploy capacity and grow market share.
This dynamic led to an acceleration in buyer-friendly conditions, with reinsurers offering greater flexibility in terms and conditions, and options for insurers to purchase expanded coverage. However, while pricing continued to moderate overall, there was significant variation in renewal outcomes as reinsurers differentiated their support for insurer programs by loss experience and performance.
Despite the impact of the California wildfires, two-thirds of the reinsurers tracked by Aon achieved double-digit return on equity in Q1 on an annualized basis. Meanwhile, the catastrophe bond market reported record issuance of more than $16.8bn in the first half of 2025 – a period that comprised the two largest transactions in the history of the market, each exceeding $1.5bn.
Total global reinsurance capacity was more than sufficient to absorb increased demand for reinsurance during the June/July renewals, particularly from US insurers. While inflation and model changes continued to influence a 10% uplift in demand limit purchased at midyear renewals in all regions, significant depopulation of Florida’s windstorm insurer of last resort, Citizens, was a notable driver. Changing views of natural catastrophe exposures was also a big factor, with recent wildfires in the US and floods in Brazil prompting insurers to evaluate loss potential and protection needs.
The property catastrophe market continued to benefit from increased supply, leading to more flexible terms and conditions, a wider range of product offerings, and greater pricing competition in all regions. The midyear renewal was notable for a further shift in the market’s appetite, with reinsurers more willing to provide protection lower down on programs.
Casualty insurers entered the midyear renewals in a relatively strong position, as robust underlying rating and underwriting actions taken in recent years helped to ensure ongoing reinsurer support. While some reinsurers have pulled back from parts of the US casualty market, others are increasing their participation, resulting in stable capacity overall. Reinsurers remain watchful of developments in nuclear verdicts, adverse development, and emerging risks, yet recognize the upside of relatively high interest rates, strong underlying casualty pricing and the prospect of tort reform.