Aon: Record reinsurance capital is supporting insurer growth

Record levels of reinsurance capital are creating greater flexibility for insurers seeking tailored solutions to support growth, manage volatility and optimise capital, according to Aon.

The broker’s “Reinsurance Market Dynamics Midyear 2026 Renewal Report” found that insurers secured double-digit pricing reductions and improved terms and conditions on property catastrophe reinsurance placements at the 1 June and 1 July renewals.

Aon said global reinsurance demand increased by more than 10%.

The increase was driven by expanded reinsurer product offerings and stronger appetite from US insurers to buy additional protection at the top of programmes.

George Attard, chief strategy officer, reinsurance at Aon, said: “A stable, well-capitalized and competitive reinsurance market provides insurers with an opportunity to align capital more closely with their risk strategies while using analytics and insight to support long-term growth.”

Aon said global reinsurance capital had reached a record $790bn as of 31 March 2026.

The broker said this was largely driven by continued growth in alternative capital.

Capacity was plentiful and more than adequate to meet increased demand, particularly in the US.

Insurers in Latin America and Australia and New Zealand also benefited from fewer constraints and ample capacity for placements.

Aon said the mid-year renewals demonstrated a continued shift towards more customised and creative reinsurance solutions.

Investments in data quality, analytics and artificial intelligence are helping expand capacity, strengthen reinsurer confidence and support better outcomes for insurers, according to the report.

Reinsurers were also more open to flexible structures and expanded products, including aggregate covers and earnings protection.

Aon said it continued to innovate with high-efficiency frequency catastrophe covers.

The report found that reinsurers’ underwriting results remain strong, with an average first quarter return on equity of 14.1%, well above the average cost of equity.

Aon said most reinsurers are well placed to comfortably exceed their cost of capital this year, with a strong El Niño weather pattern expected to suppress Atlantic hurricane activity in 2026.

Alfonso Valera, international CEO, reinsurance at Aon, said: “As the industry navigates geopolitical uncertainty, evolving exposures and shifting market cycles, insurers will need to remain agile as they assess emerging risks and opportunities across regions and lines of business.

“The ability to adapt to changing conditions while maintaining strategic focus will be increasingly important in the years ahead.”

Aon said market dynamics are driving greater focus on cycle management, innovation and M&A, as insurers maintain core retentions while exploring buy-downs and frequency covers.

The broker said the ongoing conflict in the Middle East had no direct effect on mid-year reinsurance renewals.

However, specialty coverages including marine, war, terrorism and political violence remain directly exposed to geopolitical developments.

Aon suggested any changes to reinsurance terms and conditions are more likely to emerge at January renewals, when the impact is better understood and most subject treaties renew.

If loss activity remains within expectations through the rest of the year, Aon observed that reinsurers are likely to provide greater flexibility in structures, coverage and retentions heading into 2027.

The broker said better data, analytics and AI-enabled insight are creating opportunities for more efficient and customised solutions, helping insurers make decisions across complex market cycles.

Steve Hofmann, Americas CEO, reinsurance at Aon, said: “Cycle management is becoming an increasingly important strategic priority for insurers as they balance pricing discipline with sustainable growth.

“Leading firms are evaluating a broader range of capital solutions to reduce earnings volatility, improve capital efficiency and support growth, including facultative solutions, proportional reinsurance, multi-year arrangements and legacy transactions,” he added.

Aon’s midyear reinsurance renewals report is available here: Reinsurance-Market-Dynamics-2026-Midyear-Report.pdf.