The convergence of reinsurance and capital markets is “alive and well”, as reinsurers increasingly lean on alternative capital and insurance-linked securities (ILS) products, Mike van Slooten from Aon’s Reinsurance Solutions division explained in a pre-Monte Carlo briefing today.
However, like other brokers, Aon will be looking for reinsurance capital providers to provide clients more support, particularly when it comes to managing volatility.
Mike van Slooten, Head of Business Intelligence, Reinsurance Solutions at Aon, highlighted the well-capitalised nature of the marketplace, saying he expects that to continue building.
van Slooten highlighted challenges being faced, including still high-levels of natural catastrophe losses, but said on the reinsurance sector that “we continue to see significant resilience to these trends following the market reset in 2023.”
He said that, recently, “this period of sustained profitability has resulted in a significant build-up of capital in both the traditional and alternative sectors.”
van Slooten explained, “Traditional equity increased by $14 billion to $614 billion and this is net of significant returns of capital to investors in the form of dividends and share buybacks.
“Alternative capital rose by $6 billion to a new high of $121 billion driven by a sustained investor appetite for catastrophe bonds and reinsurance sidecars.
“It is particularly notable that catastrophe bond issuance has already set a new record in 2025 with further sustained growth expected from here as sponsor, interest and peril applicability broadens.”
Van Slooten went on to say that, “Convergence remains alive and well, as leading traditional reinsurers increasingly lever these products to grow their position in the marketplace.
“Overall, reinsurance capacity is also benefiting from the increased availability of traditional retrocession protection.”
Summing up, van Slooten added, “We see a reinsurance marketplace that is in good financial health, with record levels of capacity potentially available.
“Most are expressing the desire to grow and a greater willingness to show flexibility in response to the needs of reinsurance buyers.”
The convergence of reinsurance and capital markets has been underway for more than two decades, since that term was coined and there remains a long-way to go.
But the ingress of alternative capital has been persistent and in the last few years expanded significantly, especially when you consider the meaningful partner capital strategies that have emerged and expanded at leading reinsurers, as they look to lever the insurance-linked securities (ILS) product set to drive efficiency, growth and fee income for their businesses.
These trends look set to continue, while the dedicated ILS manager segment continues to be the leading alternative capital source to the reinsurance market.
It was encouraging to hear Aon’s reinsurance leadership team also highlight the broker’s own alternative capital activities as highlights and innovation, not least its largely hidden from view Marilla strategy that channels investor capital to opportunities within its broking book.
Alfonso Valera, CEO Internation at Aon’s Reinsurance Solutions summed up the opportunity well, highlighting still attractive rates-on-line for capital providers and an expectation of continued discipline on terms, which Valera called “robust”.
But it is clear once again that this broker is also hoping capital providers offer more flexible solutions for their clients at the January 2026 renewals, with Valera saying he expects to see pressure on pricing and “opportunities for clients to cede more volatility.”
Valera also noted that demand for reinsurance remains robust and the expectation at Aon is that the property catastrophe market keeps growing overtime, also saying that Aon welcomes the growing capital base of the industry (traditional and alternative) as a way to deliver more and increasingly sophisticated solutions to its clients.
