Global insurance and reinsurance broking group Aon has reported that cedents benefited from favourable dynamics at the January 1st reinsurance renewals, aided by record levels of capital following another strong year for reinsurers, along with a benign 2025 Atlantic hurricane season which the firm says led to “competitive tension” in the market.Aon has confirmed that it will release its full Reinsurance Market Dynamics January 2026 Renewal report next week, but for now, the broker has provided some key insights into its analysis of the renewals.The broker’s report will explore capital levels within the sector, as Aon highlights that as at September 30, 2025, global reinsurer capital reached a record $760 billion, a $45 billion increase from the prior-year period’s $715 billion.Aon explained that this was primarily driven by reinsurers’ retained earnings.

According to Aon, the reinsurance sector reported an average annualised return on equity of 16% for the first nine months of 2025, well in excess of the average cost of equity.Aon explained that the record-breaking industry capital position was supported by a relatively moderate Atlantic hurricane season and increased interest from third-party capital providers for insurance risk.As per the broker, third-party reinsurance capital reached a new high of $124 billion at the end of the third quarter, a $9 billion increase compared to the prior-year period.

Aon also highlighted how the catastrophe bond market ended the year at an all-time high with more than $24 billion of bonds issued across 74 sponsors and $58 billion in catastrophe bonds outstanding.However, at this time of writing, As well as this, the reinsurance sidecar market also continued to grow and expand throughout 2025 through a combination of new re/insurers, new investors and new structures.The broker’s report will also outline how the record levels of reinsurance industry capital are expected to support growth in emerging risk protection, notably the estimated $5 trillion to $10 trillion of investment in data centres 2030, which will require significant volumes of re/insurance capacity.

“Similarly, evolving regulatory and litigation landscapes are expected to drive increased demand for liability insurance.A recent Aon study estimated that emerging risks in the casualty sector could contribute approximately $5B of reinsurance premium annually,” Aon explained.Furthermore, Aon’s report will also explore how competition among reinsurance companies was particularly strong in the United States, as buyers of protection took advantage of favourable 1/1 renewal dynamics.

According to the broker, competition was notably high among reinsurers in the United States, with preferred risks typically achieving healthy double-digit rate reductions at January 1.Meanwhile renewals in both Europe and Latin America also saw double-digit reductions with a few exceptions.The broker also highlighted that rate reductions neared 20% for non-loss impacted accounts within the Asia Pacific region.

Alfonso Valera, International CEO for Reinsurance Solutions at Aon, commented: “Buyers returning to the market will find a wide range of complementary reinsurance and capital products.Frequency covers and earnings protection are increasingly available.We are seeing growing interest in bespoke transactions such as structured solutions, loss portfolio transfers and facultative reinsurance, including hybrid treaty/facultative facilities.” Switching attention to the property space, Aon explained that insurers achieved significant discounts and improved terms at the January renewals, with competition said to be more intense and widespread compared to 1/1 2025, as sellers demonstrated greater flexibility and desire for risks that were previously outside or at the edge of their portfolios.

“An increasingly favorable facultative reinsurance market offers insurers an expanding range of flexible and complementary solutions to de-risk portfolios and support growth.We anticipate the facultative market will continue growing in 2026,” commented Aon.In addition, Aon’s report will also showcase how casualty reinsurance conditions at January 1, 2026 also remained favourable for buyers, supported by increased capacity and reinsurer appetite for risk, which the broker noted is fuelling competition for international casualty and stability for US placements.

However, despite a challenging US tort environment, Aon emphasised that a combination of improving results, a robust underlying primary market, and attractive investment returns, mean that casualty insurers were in a strong position at the renewals.Stephen Hofmann, Americas CEO for Reinsurance Solutions at Aon, said: “In a world in which risk and uncertainty is growing, businesses and governments look to insurers for solutions.Insurers can stay competitive and remain relevant to customers by leveraging attractively priced, diverse capital as well as revisiting their long-term strategy and product mix to support growth and optimize protection.

Building best-in-class strategies – from capital deployment and talent to distribution focus and underwriting innovation – is essential for thriving in today’s attractive, yet dynamic market.” Read all of our ..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.