Alternative capital rose 9% in H1’26 to record $147bn: Gallagher Re

Global non-life alternative reinsurance capital increased by 9%, or USD 12 billion in the first half of 2026 to a record USD 147 billion, driven by favourable returns and net inflows of capital, as total reinsurance capital rose by 5% in the period to a high of USD 688 billion, according to reinsurance broker Gallagher Re.

The firm’s HY 2026 Reinsurance Market Report shows that global reinsurers produced another period of strong profitability and capital growth in the six month period, despite a very competitive operating environment.

Both traditional and alternative reinsurance capital growth has been strong since 2023, with total dedicated capital rising from USD 547 billion at year-end 2023 to a record USD 688 billion at the end of June 2026. During this time, traditional capital increased by 23% to USD 541 billion, while alternative capital rose by more than 37% to the aforementioned USD 147 billion.

The 9% growth in alternative capital during the first half of this year follows significant growth of 18% for full-year 2025, supported by a strong increase in non-life catastrophe bonds outstanding, favourable returns, and net inflows of capital, according to the reinsurance broker.

“Over the past year, non-life alternative capital has increasingly started to penetrate additional lines of business such as casualty, beyond the market’s traditional focus on natural catastrophe risk,” says Gallagher Re.

The Artemis Q2 2026 catastrophe bond and related ILS market report shows that issuance in the first half of 2026 set a new record of almost USD 18 billion, as the outstanding market size at the end of June hit a new end-of-quarter high of USD 65.6 billion. This follows a record 2025 for the cat bond sector, suggesting investor appetite remains strong amid still sold returns and increased diversification within the asset class.

According to Gallagher Re, continued strong profitability and capital generation in traditional reinsurance capital, as well as the continued growth in ILS during the period were dampened by increased capital return to shareholders.

Alongside capital growth, Gallagher Re’s report finds that its composite, which tracks the performance of leading global reinsurers, recorded a 19.9% return on equity for the first six months of 2026, which is actually the second-highest half-year result recorded over the past decade.

“The first half of 2026 demonstrates that the reinsurance industry remains in a position of exceptional financial strength. Reported returns remain well above the cost of equity, capital continues to grow, and the sector has built substantial resilience against future volatility.

“However, the challenge facing the industry is increasingly becoming one of capital deployment rather than capital generation. Capital continues to grow faster than revenues, adding to an already significant supply and demand imbalance across many reinsurance markets,” said Michael van Wegen, Head of International, Gallagher Re Global Strategic Advisory.

“The industry’s financial position remains extremely robust. Our analysis suggests the sector could absorb a USD50-75 billion insured loss event, in addition to normal second-half catastrophe activity, and still earn its cost of equity for 2026,” added van Wegen.