Running investment income makes up most of reinsurers’ 13.8% underlying return, Gallagher Re finds
The broker’s half-year report shows underwriting contributing 3.2 percentage points of the composite’s 13.8% underlying return on equity, with running...
Gallagher Re’s Reinsurance Market Report for the first half of 2026 puts the underlying return on equity of its composite of large Bermudian and Big Four European reinsurers at 13.8%. Of that, running investment income contributed 11.4 percentage points and the underwriting margin 3.2, with other income and expenses taking off 0.8.
The reported figure was higher. The composite earned a 19.9% return on equity for the half, the second highest half-year return of the past decade. Once a benign catastrophe season, reserve releases and investment gains are stripped out, the underlying return fell from 15.3% a year earlier and a 15.7% peak in 2024. Excluding catastrophe losses and prior-year development, the combined ratio deteriorated by 1.1ppts to 84.7%, and P&C reinsurance revenues fell 6% as rates softened and reinsurers trimmed their books.
Investment yield fell too. The composite’s total investment yield declined from 4.5% in the first half of 2025 to 4.1%, as the gains yield dropped from 0.7% to 0.2%. Rising risk-free rates and wider credit spreads produced an unrealised depreciation of $3bn on fixed-income portfolios during the half. The running yield held at 3.8%, and Gallagher Re reports that many reinsurers still see reinvestment yields above their portfolio running yield, which supports future income as maturing securities are replaced.
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