Reinsurers enjoyed record profitability last year, but the market is turning in favour of buyers, according to Gallagher Re.

The industry can expect another strong year in 2026, but returns will not match last year’s, the broker forecasts.

“While the reinsurance industry has enjoyed several years of exceptional returns, the dynamics of supply and demand have shifted in favour of buyers, as evidenced by rate softening during the January 1 and April 1 renewals,” said Michael van Wegen, head of international at Gallagher Re Global Strategic Advisory.

A composite index of profits shows reinsurers made a 19.3% return on equity in 2025, and Gallagher expects they will still hit 14-15% this year.

Total reinsurance capital rose 11% to $US648 billion ($895 billion) last year, driven by retained earnings and capital inflows, plus a relatively benign year for natural catastrophe losses.

The industry’s combined operating ratio moved to 82.5% last year from 85.8% in 2024, marking the best result since Gallagher began its Reinsurance Market Report in 2014.

Non-life alternative capital rose 18% to $US135 billion ($186 billion), driven by strong returns and inflows to support cat bonds.