Reinsurance capital rises 5.4% to $769b on 2024 gains

Traditional reinsurance capital is projected to grow by 6% in 2025.

Global reinsurance capital reached $769b at the end of 2024, marking a 5.4% increase from the restated 2023 total, according to a report by Gallagher Re. 

The growth was supported by both traditional reinsurance firms and non-life alternative capital.

Gallagher Re’s analysis of 16 major reinsurers showed a further improvement in the reported combined ratio to 86.8% from 87.3% in 2023. 

This was mainly due to a stronger underlying combined ratio of 93%, compared to 96% in the previous year.

The reported return on equity (ROE) stood at 17%, down from 19.5% in 2023. Despite better underwriting performance and higher investment income, the underlying ROE remained steady at 13.9%, affected by challenges outside the property and casualty reinsurance sector. 

Without these headwinds, the underlying ROE would have been about 15%.

Gallagher Re expects reinsurers to sustain strong profitability in 2025, projecting an underlying ROE of around 15% and a headline ROE between 18% and 19%, assuming a typical level of natural catastrophe losses. 

Whilst California wildfires have caused significant insured losses early in the year, reinsurers are still expected to achieve ROEs that are roughly double the industry’s cost of capital.

Traditional reinsurance capital is projected to grow by 6% in 2025, supported by continued profitability.