Global dedicated reinsurance capital rose to US$663 billion at year-end 2025, an all-time high, according to AM Best, which projects a further record of US$705 billion in 2026. The figures appear in the market segment report Reinsurance Capital Reaches New Highs as Risk Budgets Decline, published on 14 August. The estimate is a joint exercise with Guy Carpenter, with AM Best estimating traditional reinsurance capital and Guy Carpenter estimating third-party capital. Total capital stood at US$607 billion a year earlier. Traditional reinsurance capital accounted for US$540 billion of the 2025 figure, up from US$500 billion, while third-party capital reached US$123 billion, up from US$107 billion. AM Best attributes the increase to underwriting profitability, investment earnings and retained earnings on the traditional side, and to investor demand for catastrophe bonds and other insurance-linked securities on the third-party side. Capital has accumulated without a significant wave of new reinsurer formations. AM Best notes that, unlike previous hard markets in which improved pricing attracted new equity and new companies, much of the recent expansion has come organically through retained earnings, allowing established reinsurers to add capacity while holding underwriting discipline. Required capital remained relatively flat during 2025 while available capital continued to expand. Traditional reinsurers’ capital utilisation, which approximates how much available capital is needed to maintain risk-adjusted capitalisation at the strongest BCAR assessment, improved to 77 per cent at year-end 2025 from 85 per cent in 2024 and 92 per cent in 2023. AM Best expects 72 per cent in 2026. Excess capital above the 10 per cent BCAR threshold reached US$157 billion in 2025, against US$112 billion in 2024, with US$183 billion projected for 2026. On domicile, reinsurers based in the US and Europe accounted for 73 per cent of dedicated reinsurance capital. The US held 40.2 per cent and Europe 32.9 per cent at year-end 2025, followed by Bermuda on 16 per cent, Asia on 8.8 per cent, Canada on 1.5 per cent, and Latin America, Africa and the Middle East, and the Cayman Islands on 0.2 per cent each. The Bermudian share rose from 15 per cent the previous year. Concentration at the top of the market continued to fall, with the five largest companies by capital accounting for 54.2 per cent of the composite, down from 55.8 per cent in 2024 and the lowest combined share since 2018. A further fall to 53.2 per cent is projected for 2026. AM Best says the trend reflects the continued expansion of Bermudian reinsurers and diversification in capital deployment across the segment. Catastrophe probable maximum loss exposure remained broadly stable during 2025, and catastrophe risk budgets, measured as PML exposure relative to available capital, continued to decline. For the reinsurance market as a whole, catastrophe PML stood at 10.35 per cent of available capital, against 13.4 per cent for the European Big Four and 19.96 per cent for the US and Bermuda market. Appetites are diverging between those groups. Since 2022 the European Big Four catastrophe PML risk budget has fallen by approximately 9 percentage points, while the US and Bermuda risk budget has risen by approximately 2.5 percentage points. AM Best projects capital growth of roughly 6.3 per cent in 2026, slightly below the prior year, and notes the projection could be revised in the event of a more active hurricane season or further geopolitical developments. The report concludes that the next phase of the market cycle may be defined less by the availability of capital than by how effectively reinsurers deploy it.
