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Aon expects a more flexible reinsurance market by 2027

Aon estimates global reinsurer capital rose to $800 billion by June 30, helping support strong earnings and capacity into the 2027 renewal cycle.

Reported · Written up by our desk · Reinsurance

Aon says the global reinsurance market is likely to become “more flexible” by 2027 as reinsurer capital reaches record levels. Speaking at an Aon briefing ahead of the 2026 Monte Carlo Rendez-Vous, Mike Van Slooten, head of market analysis for reinsurance at Aon, pointed to capacity growth alongside continued sector profitability.

According to Aon, reinsurers have generally performed well so far in 2026, with most companies on track for a fourth straight year of strong earnings. Van Slooten said market softening is already constraining reported business volumes, but underwriting results have benefited from relatively low ceded loss activity in 2026 versus last year, when California wildfires weighed on results.

Aon’s analysis tracked an average reinsurance-specific combined ratio of just over 85% in the first half of 2026, about a 10-point improvement versus last year. The executive also noted the reinsurance-specific combined ratio has been around 90% since the hard market reset in 2023, supported by relatively low primary peril losses, while investment income has become a bigger contributor since 2023 due to a more supportive interest rate environment.

Aon estimates global reinsurer capital increased by $15 billion over the six months to June 30, reaching $800 billion, with both traditional equity and third-party capital contributing. Van Slooten said return on equity averaged 15.5% in the first half of 2026 and that sector earnings have been comfortably above the average cost of capital, with the expectation that this continues into 2027 absent unusual events.

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