Aon reports competitive midyear reinsurance market despite catastrophe losses

Aon has announced the launch of its Reinsurance Market Dynamics Midyear 2025 Renewal report, which provides a comprehensive analysis of the marketplace at the June/July 2025 reinsurance renewals – a key annual renewals period, most notably in the Americas, Australia and New Zealand.

The report reveals that despite an active first half for natural catastrophe losses, midyear renewals experienced a broadly competitive environment, as reinsurers, insurance-linked securities markets and new entrants sought to deploy capacity and grow market share.

This dynamic led to an acceleration in buyer-friendly conditions, with reinsurers offering greater flexibility in terms and conditions, and options for insurers to purchase expanded coverage. However, while pricing continued to moderate overall, there was significant variation in renewal outcomes as reinsurers differentiated their support for insurer programs by loss experience and performance.

The report highlights that industry capital had increased to $720 billion by the end of Q1 2025 (FY 2024: $715B), driven by the retained earnings of established reinsurers. Despite the impact of the California wildfires, two-thirds of the reinsurers tracked by Aon achieved double-digit return on equity in Q1 on an annualised basis. Meanwhile, the catastrophe bond market reported record issuance of more than $16.8 billion in the first half of 2025 – a period that comprised the two largest transactions in the history of the market, each exceeding $1.5 billion.

Total global reinsurance capacity was more than sufficient to absorb increased demand for reinsurance during the June/July renewals, particularly from US insurers. While inflation and model changes continued to influence a 10 percent uplift in demand limit purchased at midyear renewals in all regions, significant depopulation of Florida’s windstorm insurer of last resort, Citizens, was a notable driver. Changing views of natural catastrophe exposures was also a big factor, with recent wildfires in the US and floods in Brazil prompting insurers to evaluate loss potential and protection needs.

The property catastrophe market continued to benefit from increased supply, leading to more flexible terms and conditions, a wider range of product offerings, and greater pricing competition in all regions. The midyear renewal was notable for a further shift in the market’s appetite, with reinsurers more willing to provide protection lower down on programs.

Casualty insurers entered the midyear renewals in a relatively strong position, as robust underlying rating and underwriting actions taken in recent years helped to ensure ongoing reinsurer support. While some reinsurers have pulled back from parts of the U.S. casualty market, others are increasing their participation, resulting in stable capacity overall. Reinsurers remain watchful of developments in nuclear verdicts, adverse development and emerging risks, yet recognise the upside of relatively high interest rates, strong underlying casualty pricing and the prospect of tort reform.

Steve Hofmann, US chief executive of Reinsurance Solutions at Aon, said: “At the midyear renewals, Aon continued to achieve optimal renewals outcomes for our clients, while helping them make better business decisions. The current reinsurance market conditions create opportunities for insurers to address specific issues, or to adjust program structures and coverage to reduce volatility in both property and casualty. This against a backdrop of forging the long-term partnerships that are necessary to drive innovation, new solutions and sustain a stable and robust re/insurance sector.”

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