Gallagher Re raises its full-year profitability outlook as industry capital continues to outpace revenue growth and intensify deployment pressures
Global reinsurers generated a 19.9% return on equity (ROE) during the first half of 2026, the second-highest half-year result of the past decade, according to Gallagher Re.
Its latest Reinsurance Market Report said strong underlying profitability and lower-than-normal natural catastrophe losses supported the result.
The reinsurance broker has consequently raised its full-year 2026 ROE forecast for its composite of major global reinsurers to 16.5%-17.5%, from 14%-15% previously.
The upward-revised outlook assumes normalised catastrophe losses in the second half, alongside reserve releases and realised investment gains broadly in line with long-term averages.
Michael van Wegen, head of international at Gallagher Re Global Strategic Advisory, said: “The first half of 2026 demonstrates that the reinsurance industry remains in a position of exceptional financial strength.
“Reported returns remain well above the cost of equity, capital continues to grow, and the sector has built substantial resilience against future volatility.”
Total reinsurance dedicated capital increased 5% during the first half to a record $688bn.
Traditional reinsurance capital rose 4%, while non-life alternative capital increased 9%.
Gallagher Re said the industry’s challenge was increasingly shifting from capital generation to deployment, with capital growth continuing to outpace revenue growth.
“Capital continues to grow faster than revenues, adding to an already significant supply and demand imbalance across many reinsurance markets,” van Wegen said.
The report also noted growing divergence in how reinsurers are managing excess capital.
While many carriers have increased dividends and share buybacks, Gallagher Re said capital accumulation continues to exceed capital returns, particularly as alternative capital expands into a broader range of business lines.
By year-end, Gallagher Re estimates its composite will have generated around $13bn of cumulative profits above the cost of equity across the 2017-2026 period.
Van Wegen said: “The industry’s financial position remains extremely robust.
“Our analysis suggests the sector could absorb a $50-75bn insured loss event, in addition to normal second-half catastrophe activity, and still earn its cost of equity for 2026.”
Full report to download here.
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