Record Reinsurance Capital Pivotal to Profitable Growth Opportunities for Insurers – Aon Renewal Report

Aon plc (NYSE: AON), a leading global professional services firm, announced that its Reinsurance Market Dynamics January 2026 Renewal report, which reviews the January 1 reinsurance renewal period and evolving trends in the sector, will be published on January 5, 2026. 

The report will reveal that cedants benefited from favorable renewal dynamics, as record-breaking capital – following another year of strong reinsurer results – and a benign hurricane season created competitive tension in the marketplace.

Competition among reinsurers was particularly strong in the U.S. property catastrophe market, with preferred risks typically achieving strong double-digit rate reductions at January 1. Property renewals in Europe, Latin America and Asia Pacific also saw double-digit discounts for non-loss impacted accounts with a few exceptions.

While insurers were broadly comfortable with current levels of protection at 1/1, many are likely to explore additional solutions to strenghten capitlal positions and support profitable growth initiatives in the new year.

Aon estimates global reinsurer capital reached a record $760B at September 30, 2025 – up $45B from the prior-year period ($715B), driven mainly by reinsurers’ retained earnings. The reinsurance sector reported an average annualized return on equity of 16 percent for the first nine months of 2025, well in excess of the average cost of equity.

The record-breaking industry capital position was supported by a relatively moderate Atlantic hurricane season and increased interest from third-party capital providers for insurance risk. Third-party capital reached a new high of $124B at the end of the third quarter – up $9B relative to the prior-year period. The catastrophe bond market ended the year at an all-time high with more than $24B of bonds issued across 74 sponsors and $59B in catastrophe bonds outstanding. The sidecar market also continued to grow in 2025 through new (re)insurers, new investors and new structures resulting in exciting growth.

Aon’s upcoming Reinsurance Market Dynamics report will also highlight that record levels of industry capital are expected to support growth in emerging risk protection. For example, the estimated $5T to $10T of investment in data centers by 2030 will require significant insurance capacity with the potential to generate cumulative premiums exceeding $100B over the same period.

Similarly, evolving regulatory and litigation landscapes are expected to drive increased demand for liability insurance. A recent Aon study estimated that emerging risks in the casualty sector could contribute approximately $5B of reinsurance premium annually.

In the property sector, insurers attained significant discounts and improved terms at January 1 renewals. Competition was more intense and widespread than the prior-year period, with reinsurers demonstrating greater flexibility and desire for risks that were previously outside or at the edge of their portfolios.

An increasingly favorable facultative reinsurance market offers insurers an expanding range of flexible and complementary solutions to de-risk portfolios and support growth. We anticipate the facultative market will continue growing in 2026.

In casualty, conditions at January 1 remained favorable for reinsurance buyers, supported by increased capacity and reinsurer appetite for risk – fueling competition for international casualty and stability for U.S. placements. Despite a challenging U.S. tort environment, casualty insurers were in a strong position, driven by improving results, a robust underlying primary market and attractive investment returns.

Alfonso Valera, International CEO for Reinsurance Solutions at Aon, said: “Buyers returning to the market will find a wide range of complementary reinsurance and capital products. Frequency covers and earnings protection are increasingly available. We are seeing growing interest in bespoke transactions such as structured solutions, loss portfolio transfers and facultative reinsurance, including hybrid treaty/facultative facilities.”

Stephen Hofmann, Americas CEO for Reinsurance Solutions at Aon, said: “In a world in which risk and uncertainty is growing, businesses and governments look to insurers for solutions. Insurers can stay competitive and remain relevant to customers by leveraging attractively priced, diverse capital as well as revisiting their long-term strategy and product mix to support growth and optimize protection. Building best-in-class strategies – from capital deployment and talent to distribution focus and underwriting innovation – is essential for thriving in today’s attractive, yet dynamic market.”

For information about Aon’s Reinsurance Solutions: https://www.aon.com/en/capabilities/reinsurance

About Aon

Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.