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AM Best expects reinsurers’ capital utilization to rise to 72% in 2026
AM Best and Guy Carpenter forecast dedicated reinsurance capital reaching a record $705 billion by year-end 2026, with $575 billion from traditional sources and $130 billion from alternative capital.
Reinsurance News reports that AM Best expects traditional reinsurers’ capital utilisation to keep improving, rising to 72% by year-end 2026 from 77% at the end of 2025. The credit rating agency said the improvement continues a trend from 85% in 2024 and 92% in 2023.
AM Best linked the projected improvement to record dedicated reinsurance capital backed by both traditional and alternative sources. It cited AM Best and Guy Carpenter data showing dedicated reinsurance capital is expected to reach $705 billion at year-end 2026, made up of $575 billion of traditional capital and $130 billion of alternative capital.
The rating agency said capital utilisation is calculated by comparing required capital with available capital under its strongest BCAR assessment, which assumes a 25% level at a 99.6% VaR level. AM Best noted that while capital utilisation improves, it does not indicate a meaningful reduction in the risks reinsurers are taking.
According to AM Best, the 2025 improvement was driven mostly by growth in available capital, with required capital staying relatively flat year over year, while strong underwriting and investment earnings boosted the industry’s capital base. AM Best said the market is entering 2026 with historically strong capital buffers and added financial flexibility, it added.