Gallagher Re has released its Reinsurance Market Report for the first half of 2025, offering an updated analysis of global reinsurance capital and profitability. The semiannual report examines the Gallagher Reinsurance INDEX group of companies and provides a detailed look at the industry’s financial position.
Global Capital Growth
Global reinsurance dedicated capital reached USD 805 billion at mid-2025, reflecting a 4.8% increase compared to the restated full-year 2024 base. This growth was fueled by both INDEX companies and non-life alternative capital, signaling ongoing strength in available reinsurance capital.
Profitability and Combined Ratios
Gallagher Re’s analysis of 16 key reinsurers found that combined ratios — an important measure of underwriting profitability—showed a slight upward trend:
- Reported combined ratio rose to 87.5%, compared to 84.6% at half-year 2024.
- Underlying combined ratio edged up to 94.7%, versus 94.2% at the same point last year.
While still historically strong, these figures point to a modest increase in underwriting costs and claims relative to premiums.
Returns on Equity
Return on equity (ROE), a key profitability metric, remained robust but softened year over year:
- Reported ROE was 17.7%, down from 19.6% at half-year 2024.
- Underlying ROE fell to 12.6%, compared to 15.2% a year earlier.
Gallagher Re attributed part of this decline to one-time factors unrelated to property and casualty reinsurance underwriting or investment income. The underlying underwriting margin decreased by 0.5 percentage points, primarily due to excess capital accumulation.
Outlook for 2025
The report indicates that reinsurers remain well-positioned to maintain strong profitability through 2025. Assuming a typical level of natural catastrophe losses:
- Underlying ROE is expected to reach 13–14% annually.
- Headline ROE is projected at 17–18%, remaining well above the industry’s cost of capital.
Additionally, traditional reinsurance capital is on track to grow by about 8% in 2025, supported by continued profitability and significant capital buffers that can absorb potential volatility.
Gallagher Re’s latest data highlights a global reinsurance sector that demonstrates solid capital strength and stable profitability, even as combined ratios and underlying returns show moderate upward and downward movements, respectively.
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