The January 1 renewals have demonstrated Bermuda’s central role in the global reinsurance market, with negotiations finalised late in the cycle but progressing in an “orderly fashion”, according to John Huff, the chief executive of the Association of Bermuda Insurers and Reinsurers.

“Property cat reinsurance rates continued to moderate at this point in the cycle but remained adequate — even attractive,” he said, adding that favourable terms and conditions for reinsurers largely held despite rising competition. “Property cat business is still in a good place.”

Mr Huff pointed to the early-January 2025 California wildfires — among the costliest in history — as a test of the market’s resilience. Bermuda-based reinsurers were expected to assume about $10 billion of liabilities, representing up to 30 per cent of total projected industry losses, in addition to support from insurance-linked securities, according to the Bermuda Monetary Authority.

Third-party capital rose to an estimated $124 billion, with $59 billion of catastrophe bonds outstanding and continued growth in sidecar structures, including newer vehicles supporting casualty and speciality risks, according to Aon in its Reinsurance Market Dynamics: January 2026 Renewal Report. The broker said this access to alternative capital has allowed large, well-capitalised reinsurers to deploy capacity more flexibly while managing tail risk.

Meanwhile, record capital and a disciplined buyers’ market are giving Bermuda’s reinsurers an opportunity, even as pricing pressure builds in property catastrophe business, according to the report.

Despite softer pricing at the January renewals, Aon said, the market has remained disciplined. Retention levels and attachment points were largely unchanged, coverage terms broadly held, and reinsurers stayed within major loss budgets despite global insured catastrophe losses exceeding $100 billion for the sixth consecutive year

“That demonstrated the value proposition of risk diversification and management of exposure aggregation,” Mr Huff said, noting that the market closed out 2025 “healthy and well capitalised.

“Not all reinsurance is created equal,” he added, however, arguing that Bermuda’s regulatory standing — including Solvency II equivalence and reciprocal jurisdiction status with the United States National Association of Insurance Commissioners — has positioned the island at the centre of what he described as one of the healthiest reinsurance markets in decades.

Speaking separately to The Royal Gazette, Michael van Slooten, Aon’s head of market analysis for reinsurance solutions, agreed that Bermuda is emerging as one of the main power centres in this new phase.

“There are three companies in Bermuda that really are joining the ranks of the largest global reinsurers at this point,” he said, citing Arch, Everest and RenaissanceRe. “Those companies are all comfortably in the top ten global players at this point”.

They are helped by scale, diversification and growing use of alternative capital tools such as catastrophe bonds and sidecars to support their core portfolios, according to the Aon report.

The question now is how that capital is deployed. Aon estimates that about 40 per cent of global catastrophe losses went uninsured in the first half of 2025, with the protection gap closer to 90 per cent in some regions. “You don't really want to be in a situation where there's an ever-increasing pool of capital that’s chasing the same risk, the same premium pool,” he said.

Instead, he argued, the next test for Bermuda’s leading reinsurers is whether they can redirect excess capacity from simply competing on price towards closing those protection gaps — before the next loss cycle resets the market once again.

Aon estimates global reinsurance capital reached a record $760 billion by the end of September 2025, up about $45 billion year-on-year. Reinsurers delivered an average annualised return on equity of 16 per cent in the first nine months of 2025, well above estimated long-term costs of equity.