Global Reinsurance Capital Hits $663 Billion

Int’l Desk: Global dedicated reinsurance capital hit a record 663 billion dollars at the end of 2025, rising from 607 billion dollars the year before, even as the capital needed to support industry risks stayed largely unchanged. Traditional reinsurers and third party investors kept adding funds, according to AM Best, which noted that the widening gap between available and required capital has strengthened financial buffers across the sector.

Traditional reinsurers saw their capital utilisation drop to 77% in 2025 from 85% in 2024. Available capital grew while required capital held steady, so the improvement does not signal any major cut in the risks the industry is taking on. Instead, firms have built up capital while staying fairly cautious about putting it to work. Traditional reinsurance capital itself climbed to 540 billion dollars from 500 billion dollars.

Reinsurers based in the US and Europe still held 73% of dedicated capital, while Bermuda’s share edged up to 16% from 15%. The five largest players accounted for 54.2% of the market’s capital, down from 55.8% and the lowest combined share since 2018. Most of the increase came from strong underwriting results and investment income on fixed income portfolios, largely through retained earnings rather than new company formations.

Third party capital also set a record, with insurance linked securities rising to 123 billion dollars from 107 billion dollars, helped by solid demand for catastrophe bonds and similar instruments. Catastrophe probable maximum loss exposure remained broadly stable, so risk budgets measured against available capital continued to fall. This has given reinsurers more capacity to absorb losses or expand underwriting if they choose.

AM Best observed that capital has built up faster than the underlying risks the industry supports. Firms now face choices about growing their portfolios, moving into primary or specialty lines, pursuing acquisitions, returning funds to shareholders or simply holding larger buffers. Trends vary by region. The European Big Four have cut their catastrophe risk budgets by about nine percentage points since 2022, while the US and Bermuda markets have raised theirs by roughly 2.5 points.

AM Best expects capital utilisation to ease further to 72% in 2026 and forecasts overall reinsurance market growth of about 6.3%, a touch softer than the prior year. The next stage of the cycle may depend less on how much capital is available and more on how effectively reinsurers put it to use. Competitive pressure could rise if demand for capacity and underlying risk exposure fail to keep pace.