Growth in traditional & alternative takes total reinsurer capital to new high of $715bn in 2024: Aon

Global reinsurer capital increased by almost 7% over the course of 2024 to a new high of $715 billion, driven by strong retained earnings and an expanding catastrophe bond market, according to insurance and reinsurance broking group, Aon.

Aon’s April 2025 Reinsurance Market Dynamics report explores key market trends in the context of the April 1st, 2025, reinsurance renewal, a period described by the broker as competitive with improved pricing for most buyers and robust levels of capacity and reinsurer appetite.

In fact, the reinsurance sector’s level of capital has never been so high, according to Aon, increasing by $45 billion to $715 billion from the end of 2023 to the end of 2024.

“The total was unchanged in the fourth quarter, driven by the earnings impact of Hurricane Milton and strengthening of the U.S. dollar,” explains Mike Van Slooten, Head of Market Analysis and Richard Pennay, CEO of Insurance-Linked Securities, Aon.

Aon’s estimate reveals that traditional reinsurer capital increased by roughly 7%, or $30 billion to $600 billion at the end of 2024, which is higher than the volume of total reinsurer capital (which includes alternative capital) in 2015, 2016, 2018, and 2022.

Alternative reinsurance capital also increased during last year, by 6.5% to a record high of $115 billion from $108 billion in 2023, with Aon highlighting attractive market conditions which encouraged existing participants to reinvest profits and new entrants to commit funds to the market.

The chart below, provided by Aon, shows the long-term growth in traditional, alternative, and total reinsurer capital since 2015, revealing growth of approximately 27% in total capital from the end 2015 to the end of 2024.

Commenting on traditional capital, Van Slooten and Pennay said: “Most of the companies tracked showed a second year of strong top-line growth in 2024, with reinsurance generally out-pacing insurance at hybrid carriers. Retained business expanded even more quickly, with previously achieved rate increases earning through and benefiting attritional loss ratios.

“Underwriting results were generally strong in 2024, albeit slightly weaker than in the prior year. The average combined ratio across 30 companies surveyed was 91.7 percent, up from 90.3 percent in 2023, largely due to the effects of the active Atlantic hurricane season.”

Discussing the alternative capital marketplace, the pair said: “In addition to the robust growth of the catastrophe bond market, the broader ILS market has seen further growth in sidecar capital, pushing alternative capital to nearly $115 billion. Aligning with the themes of prior quarters, alternative capital growth has been achieved through strong investor returns funded by cedents whose demand for capital has continued to grow because of inflation, evolving views of risk, and the broader dynamics of traditional reinsurance and capital markets.”

As reinsurance capital continues to expand and keep pace with increasing demand, Aon is expecting more than $7.5 billion of additional US property catastrophe limit demand heading into the mid-year renewals.

“We also anticipate some additional reinsurance purchasing from U.S. national carriers looking to mitigate further major net losses during 2025,” explains the broker.

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