Global reinsurers entered the second half of 2025 with record levels of capital, but Bermudian-based companies were among the hardest hit by this year’s natural disasters, according to the latest Gallagher Re half-year market report.

Dedicated reinsurance capital reached $805 billion at midyear, up nearly 5 per cent from the end of 2024. Growth was driven mainly by retained earnings, with “Index” companies – which account for more than 80 per cent of sector capital – adding $31 billion.

Despite strong balance sheets, reinsurers faced one of the costliest first halves in more than a decade.

Global insured catastrophe losses topped $84 billion, led by devastating wildfires in California and Los Angeles.

Gallagher Re said it was the worst start to a year since 2011, 55 per cent above the ten-year average.

That left the industry with a higher combined ratio – a key measure of underwriting profitability – of 87.5 per cent, compared with 84.6 per cent a year earlier.

For Bermudian-based players such as RenaissanceRe, Everest Re, Arch Capital and Fidelis, wildfire losses drove ratios above 100 per cent in some cases, while European firms were less exposed.

Even so, reinsurers still reported attractive returns. The sector’s return on equity stood at 17.7 per cent, with an underlying measure of 12.6 per cent once catastrophe and investment gains were stripped out.

Gallagher Re projects full-year ROE of 17 per cent to 18 per cent, in line with last year.

Revenue growth slowed to just over 3 per cent, the weakest since 2017, as pricing momentum eased outside of US casualty lines. Some reinsurers, including Swiss Re and Scor, scaled back exposure to that business.

Investment income provided a cushion, with total yields rising to 5 per cent from 4 per cent in the same period last year, although Gallagher Re noted several Bermuda reinsurers reduced risk in their portfolios, limiting gains compared with European peers.

The report said the industry remains well positioned to withstand volatility.

Gallagher Re estimated it would take a $115 billion insured loss on top of normal catastrophe activity to drag average returns since 2017 down to 10 per cent.