This report provides in-depth analysis of the capital and profitability of the reinsurance industry, based on the Gallagher Reinsurance Index group of companies.
Key findings from this report
- Global reinsurance dedicated capital totalled USD769 billion at full year 2024, an increase of 5.4% versus the restated full year 2023 base. Growth was driven by both the INDEX companies and non-life alternative capital.
- Gallagher Re’s in-depth analysis of a subset of 16 reinsurers shows the reported combined ratio further improved to 86.8% (2023 FY: 87.3%). This was driven by a strong improvement in the underlying combined ratio to 93% (2023 FY: 96.0%).
- The reported ROE remained strong at 17%, albeit lower than 19.5% at 2023 FY. Despite improved underlying underwriting profitability and higher running investment income, the underlying ROE remained stable at 13.9% due to headwinds outside P&C reinsurance. Without this, the underlying ROE would have been approximately 15%.
- Reinsurers are well positioned to maintain strong profitability in 2025. Assuming a ‘normal’ level of natural catastrophe losses, we expect an underlying ROE of around 15% and a headline ROE of approximately 18-19%1. The California wildfires have resulted in substantial insured losses early in the year, but even if these losses prove to be incremental to annual Nat Cat budgets, reinsurers are well placed to deliver headline and underlying ROEs which are roughly double the industry’s cost of capital.
- Reflecting the continued strong profitability, traditional reinsurance capital is on track to increase by 6% in 2025. Resilience of the reinsurance industry materially improved over the past three years, driven by significantly improved underlying profitability.