By the end of September this year, the amount of alternative capital in the reinsurance industry had increased by 5% over the nine-months of 2024, to reach another new high of $113 billion, helped by retained earnings and catastrophe bond market inflows, broker Aon has said.Overall, total dedicated reinsurance market capital expanded by almost 7% over the first nine-months of 2024, with some $45 billion added to the sector’s underwriting firepower.Traditional reinsurance capital grew the fastest, with Aon estimating more than 7% growth from $562 billion at the end of 2023, to a new high of $602 billion at the end of September 2024.

Driving reinsurer capital higher were retained earnings and unrealised gains on bonds that contribute directly to equity, the broker explained.Alternative reinsurance capital, so largely representing the capacity deployed by insurance-linked securities (ILS) fund managers and by market players through other ILS structures, grew more slowly than traditional over the nine-months, by Aon’s estimate.Alternative and ILS capital sat at $108 billion at the end of 2023, but expanded by 5% to $113 billion by September 30th 2024, Aon reports.

Alternative reinsurance capital stood at $110 billion after the mid-point of 2024, .So the amount of alternative capital in global reinsurance markets is estimated to have expanded by almost 3% over the three months from June 30th 2024 to September 30th.Looking a little further back, alternative reinsurance capital has now expanded by almost 22% since the end of 2022, which is an impressive growth curve.

With further expansion having occurred in the final quarter of 2024, the next reporting from Aon for full-year 2024 figures should show an even higher figure for alternative reinsurance capital in the industry.Aon concurs, saying, “The alternative capital market is on course to end 2024 at an all-time high.” Aon also noted in its new reinsurance report that the catastrophe bond market has been a significant driver for alternative capital and insurance-linked securities (ILS) market growth.Alongside which, some continued expansion in reinsurance sidecars has been seen.

By the broker’s numbers, the catastrophe bond market expanded in outright size by 11% in 2024 and has grown by a significant 34% since the start of 2023.As a result, catastrophe bonds have remained the biggest contributor to growth in alternative capital and ILS over the last two years, which .For comparison, while Aon puts alternative reinsurance capital at $113 billion as of September 30th 2024, .

As we said then, these estimates do not tend to include the capital supplied by a range of institutional investors to structures dedicated to backing life and annuity reinsurance risks.Neither do they tend to include all casualty focused structures backed by investor funding and there are even property catastrophe risk structures that do not get counted as well.So, depending on what is included, the total amount of capital in the reinsurance market that we would consider to be alternative, or supplied directly to structures by institutional investors supporting risk rather than equity balance-sheets, is likely higher..

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