Reinsurance capital hits $766b, up 5.4%

Return on equity remained strong at 19.6%.

Global reinsurance dedicated capital reached US$766b by mid-2024, marking a 5.4% increase from the restated total for the full year 2023, driven by both INDEX companies and non-life alternative capital, according to Gallagher Re.

Gallagher Re's analysis of 16 reinsurers shows continued improvement in profitability, with the reported combined ratio improving to 84.5% (2023 HY: 87.0%) and the underlying combined ratio down to 93.6% (2023 HY: 96.1%).

Reinsurers' reported return on equity (ROE) remained strong at 19.6% (2023 HY: 19.2%), while the underlying ROE increased to 15.5% (2023 HY: 13.6%), bolstered by better underwriting margins and higher investment income. Both reported and underlying ROEs comfortably exceed the industry’s cost of capital.

With improved profitability in recent years, the industry has fully recovered from weaker years between 2017 and 2020, and is well-positioned to handle future volatility.