2025 in Review

It was a year of new records. The most expensive wildfire loss ever recorded was one of them. The estimated $40 billion of insured losses arising from the Palisades fire is a record. Meanwhile, the Copernicus Atmosphere Monitoring Service observed record-high emissions from wildfires in Europe in 2025.

The estimated $50 billion cost of severe convective storms in 2025 is not a record, but comes close. Together the fires and storms were big contributors to the year’s natural catastrophe cost grand total, which Willis Re expects to exceed $100 billion for a sixth consecutive year.

The 2025 Atlantic hurricane season was not a record-breaker in terms of damage, but the ocean was warmer than typical and spawned three Category 5 hurricanes (the record is four, 20 years ago). Hurricane Melissa was the strongest tropical cyclone of the year, and the strongest ever to make landfall in Jamaica. Parametric reinsurance markets were tested there, and paid promptly. The total number of named storms was lower than average, but in total their Accumulated Cyclone Energy rating was higher than average, at 132.4, according to NOAA’s National Hurricane Center.

Willis Re will deliver much more detail about global natural catastrophe events in the forthcoming Willis Research Network’s 2025 Natural Catastrophe Report. All told, cat losses in 2025 fell well within global reinsurers’ budgets. They were insufficient to halt the arrival of a buyers’ market for property catastrophe treaty reinsurance and retrocession.

Some specialty reinsurance markets suffered strings of losses, but these too failed to turn the tide of rate erosion. A period of relative calm in the energy insurance sector came to an end early in 2025 with a string of substantial refining losses. Additional loss events in the third quarter added to the pressure, bringing the loss total to as much as $4.5 billion, probably in excess of total downstream premium.

Despite fires at PBF Martinez and Varo Bayernoil refineries in Spring (reserved in total in excess of $2 billion), and at Marathon Galveston Bay in June and Mol Danube in November, an ammonia explosion at a CF Industries chemicals plant last month in Yazoo, and, in the renewables arena, a fire at the Moss Landing battery storage facility, energy treaty renewals have proceeded without significant changes. The market continues to soften gently.

One energy-related loss will not be picked up by the energy market. April’s Iberian power grid blackout could cost insurers up to €300 million, driven by an accumulation of claims hitting home, commercial, travel, and business interruption insurers, Morningstar DBRS states. Another outage leading to claims was the significant Amazon Web Services us-east-1 failure in October. Parametrix estimates that US businesses incurred direct and indirect losses of up to $650 million.

The downtime incident wasn’t reported to be particularly costly for the airlines sector, which is often grounded by such incidents. However, other losses made 2025 a costly year for the aviators – perhaps the most costly ever, excluding the Twin Towers strike. An American Airlines Bombardier CRJ700 collided mid-air with a US military helicopter in January. An Air India plane crashed in June, a Turkish ACT cargo plane went down in October, and a UPS plane crashed in November. All that followed the loss on 29 December 2024 of Korean Jeju Air’s Flight 2216, due to a bird strike.

Airline liability losses take a long time to settle, but despite what could be the costliest year ever for airline hull and liability insurers excluding 2001, and the huge hit to the aviation war market from the Russian seizure of leased international aircraft following the Russian invasion of Ukraine, the aviation reinsurance market may still be softening.

The pace of reinsurance carrier M&A was high in 2025, fueled notably by the acquisition of some relatively recent entrants. The buyers were mostly incumbents, but the latest of the year’s deals saw an absolute newcomer to insurance risk enter the market through an acquisition. In December Howard Hughes Holdings – the famous American magnate’s company – acquired the Bermuda specialty re/insurer Vantage Risk for $2.1 billion in cash. The deal marks an interesting entry into the sector by a non-insurance conglomerate.

Earlier AIG agreed to acquire Bermuda specialty re/insurer Convex for $7 billion, alongside the PE investor Onex, which will have 63% of the firm, while AIG gains 9.9% of Onex. The deal is another success for Catlin founder Stephen Catlin, whose eponymous Lloyd’s business was sold to XL, and later became part of Axa XL.

The same month, commercial insurer Starr said it would acquire re/insurer IQUW for $1.5 billion, making the former’s Lloyd’s managing agency the ninth largest  in the market. IQUW adds about $1.9 billion in projected 2025 GWP through two Lloyd’s syndicates and a Bermuda reinsurance platform. A month earlier, another relatively young re/insurer, London-based Inigo, was acquired by US mortgage insurer Radian for $1.7 billion. This deal gives Radian a much broader scope.

Sompo International’s $3.5 billion acquisition of Aspen Insurance in August was a significant consolidation in the global re/insurance market. The Japanese acquirer used cash garnered from the unwinding of old cross-shareholdings. Aspen was founded in Bermuda in 2002 by Lloyd’s veteran Chris O’Kane.

These deals alone saw $15.8 billion spent on just five acquisitions in the global re/insurance market.

Mereo Insurance is a new global reinsurer established in Bermuda early in 2025. It launched with more than $700 million of capital to back a diversified reinsurance portfolio of property and casualty business. It’s chaired by industry legend Brian Duperreault, with veteran David Croom Johnson as CEO.

Wayfare Reinsurance was launched in July, also in Bermuda, as a $500 million sidecar reinsurance vehicle for Ascot Group. It’s just one example of the growing popularity of casualty ILS vehicles, which in total could have added up to $2 billion in capacity in 2025.

Syndicate 2478 at Lloyd’s was formed by AIG and began accepting risk in January 2025, with backing from the hedge fund Blackstone and managed by AIG’s Talbot Underwriting. The syndicate has a 2025 stamp capacity of $715 million to support AIG’s outward reinsurance program.

Almost exactly a year later, Syndicate 2479 at Lloyd’s was formed this month by AIG and Blackstone with Amwins, the wholesale broker, to channel around $400 million of third-party capital towards the broker’s delegated authority business.

OAK Reinsurance Syndicate 2843 at Lloyd’s, founded by former RenaissanceRe executive Cathal Carr, targets a broad reinsurance book of property, cyber, credit, marine, energy, and parametric risks with capacity of more than $400 million.

The last three relaunches listed illustrate the renewed attraction of Lloyd’s as a start-up domicile for reinsurance businesses, with its immediate global reach and security ratings, and the efficacy of its transformer facility, London Bridge II. The former pair show how Bermuda remains an important global reinsurance hub. All reveal the importance of private capital in the evolution of the reinsurance market. Together they brought more than $2.7 billion of new capacity into global re/insurance markets.

Almost across the board, reinsurance pricing softened over the course of 2025, and looks set to decline further as the ongoing renewal progresses.

Property catastrophe capacity was abundant in 2025, and continues to grow. Profitable reinsurance underwriting in 2024 and now in 2025 has swollen balance sheets, leaving more capital for deployment, and the attractive returns achieved by the market have attracted new capital through M&A and the capitalization of new carriers, but also through smaller new ventures, primary carriers, and fresh allocations to new and existing MGAs.

Meanwhile competition from alternative capital sources has increased. Chief among the alternative supplies, particularly for retrocession exposures, is catastrophe bonds. They’ve supplied another record: the total capacity provided by cat bonds issued since 1996 has now surpassed $200 billion, including from 116 deals completed in 2005, according to Artemis. The publication reports total issuance during 2025 (at the time of writing) of $24.3 billion, with bonds providing capacity of $60.1 billion outstanding.

Cat bond returns are declining along with those of the rest of the reinsurance market, but they remain healthy at about 8%. That’s attracted new investors over the course of the year, as well as many new issuers. Privately negotiated ILS placements are also on the rise. Capital deployed through collateralized reinsurance, whole-account quota share sidecars, industry loss warranties, and other structures is on the rise. Casualty ILS also saw a major growth spurt, prompting many to forecast that the sector is coming of age.

We’ve counted more than $45 billion flowing into the reinsurance and commercial insurance sector in 2025, excluding retained earnings. Some has been returned to shareholders, and some of the money spent on acquisitions leaves the market, but the net influx is huge.

Low losses and rising capacity are a very positive combination for reinsurance buyers. They point to a significantly softening market and the reintroduction by reinsurers of previously limited aggregate excess of loss treaty capacity. We forecast a continuing easing of conditions, greater competition between reinsurers for cessions, and continued new supply.