Aon sees buyers gain leverage as renewal season begins

As reinsurance executives prepare for Monte Carlo, Aon has released its “Snapshot Guide to the Reinsurance Renewal – September 2025”, pointing to strong buying power for cedents as 1/1 renewals approach.

“The momentum is with reinsurance buyers as the January 1 renewal season gets underway,” the reinsurance broker’s report said.

“Demand for reinsurance protection in all its forms is robust, and capacity is plentiful, with industry capital and catastrophe bond issuance both at historic highs.”

It added: “The outlook is broadly positive, yet the operating environment remains fragile. Insured losses are elevated — 2025 is already 75% above the eight-year average — while geopolitical and economic volatility are creating uncertainty around inflation and interest rates.”

Capital surge and record ILS

Industry capital has climbed to unprecedented levels. Aon estimated that “global reinsurance capital hit a new high of $735bn at June 30, 2025, driven mainly by retained and redeployed earnings in both the traditional and alternative capital sectors.”

Alternative capital stood at $121bn, according to Aon, with catastrophe bonds accounting for $54bn of the total, up nearly 20% year-on-year. By mid-August, issuance had already reached $17.3bn, surpassing the full-year 2024 total of $17bn.

“The insurance-linked securities market experienced unprecedented growth and dynamism over the past year, cementing its role as a critical source of capital for both insurers and reinsurers,” the report said.

Sidecars also expanded sharply, with outstanding capital reaching $17bn.

“Sidecars are now an important source of proportional reinsurance capacity, helping insurers manage claims frequency and volatility. The development of casualty sidecars, in particular, marks a significant evolution, further broadening the market’s reach,” Aon added.

Strong results, supportive market

Despite global insured catastrophe losses exceeding $100bn in the first half of 2025, reinsurers absorbed relatively modest claims.

“The underlying profitability of the business earning-through has enabled the sector to absorb the impact of the California wildfires without difficulty,” the report said.

The average combined ratio across 30 leading global reinsurers was 94.8% for H1 2025, compared with 89.5% in the same period of 2024, still profitable but creeping towards break-even.

Investment returns softened slightly to 3.9% on an annualised basis, but average return on equity remained healthy at 14.5%, well above the estimated 8–10% cost of equity.

Absent unusually large losses, Aon said the sector “remains on course to deliver a third consecutive year of strong results in 2025.”

P&C and cyber opportunities

The report suggested that the January renewal marks a significant further shift to a buyers’ market, providing insurers with increased leverage to restructure their reinsurance programmes and explore products previously lost during the hard market.

Aon said it expects global property catastrophe reinsurance limits to rise 5% in 2026, following a 6% increase in 2025, led by the US and Europe.

In casualty, conditions remain broadly stable but differentiation is widening, according to the broker.

“Capacity for US casualty is broadly adequate, but outcomes are widening as reinsurers increase differentiation. Insurers’ operations, pricing and underwriting strategies are under scrutiny, with particular attention to claims management sophistication.”

Cyber reinsurance also offers growth potential. The market remains adequately capitalised, with opportunities to close the still-large protection gap. “Global cyber insurance market penetration remains low relative to exposures, but reinsurance capacity is positioned to support strong growth,” the report added.

Alfonso Valera, CEO of international for reinsurance solutions at Aon, said: “Buyers can use the favorable reinsurance market dynamics to seize a strategic advantage, and so we are assisting our clients to secure the capital that can accelerate growth. Success in today’s re/insurance market depends on anticipating and responding to change and opportunity using the full spectrum of solutions.”

Stephen Hofmann, CEO of the Americas for reinsurance solutions at Aon, added: “Insurers can stay competitive and remain relevant to their customers by leveraging attractively priced and diverse capital, and revisiting their long-term strategies and product mixes to support growth and manage volatility. 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.”