According to the new 1st View report from ICMIF Supporting Member Gallagher Re, the April 1 renewal activity saw more capacity and optionality for buyers, specific to class of business, geography, performance, strategy and scale. Data in the report indicates the reinsurance industry has reached a record traditional capital high of USD655 billion, owing to strong reinsurer results in 2023 and 2024. Assuming natural catastrophe losses stay within their 2025 budgets, Gallagher Re believes many reinsurers are expecting attractive underwriting results and double-digit ROEs in 2025.
Reinsurers balance growth ambition with rising pressure for shareholder returns
According to the report, reinsurers are entering 2025 with a clear ambition to grow, but there’s a growing awareness that this growth will be more measured than many stakeholders might hope. With surplus capital on hand, many firms are prioritising shareholder returns—most notably through increased dividends and share buybacks—as they navigate a shifting risk landscape.
Primary market challenges and the impact of catastrophe events
The primary insurance market continues to reflect a patchwork of performance, says the report, shaped by regionalised losses and strategic portfolio adjustments. Events like the California wildfires underscore the vital role of insurance in disaster recovery and highlight the continued importance of addressing secondary perils. These challenges also point to the need for more robust oversight and underwriting discipline in order to support market stability.
Regional focus: Japan
In Japan, reinsurance pricing trends show a faster-than-expected softening compared to global counterparts. This shift follows years of elevated catastrophe pricing driven by the typhoons of 2018 and 2019. Buyers in the region are now benefiting from more favourable terms in 2024, as reinsurers look to expand across multiple product lines and secure new business opportunities.
Specialty markets adapting to legacy losses
The specialty segment is facing its own headwinds with the resolution of losses related to aircraft leasing in the Russia-Ukraine conflict having led to reserve adjustments among specialty (re)insurers. Even so, Gallagher Re believes the global reinsurance market is demonstrating discipline, with a continued focus on differentiating between profitable and underperforming accounts when it comes to rate reductions.
In conclusion
With capital deployment strategies under scrutiny, Gallagher Re concludes reinsurers must walk a fine line between delivering value to shareholders and identifying sustainable growth opportunities. While small-to-mid-sized acquisitions are gathering pace, larger M&A activity—though less frequent—remains a strategic option. In the absence of stronger reinsurance demand, pressure to justify capital usage will likely intensify through the year.
Download the full report here. The 1st View report delivers insights from Gallagher Re on current market conditions within the reinsurance industry, covering the changes in pricing levels and conditions experienced by Gallagher Re brokers and product specialists. The report is published at the key renewal seasons — 1 January, 1 April and 1 July — to deliver the very first view on current market conditions in the reinsurance industry.
