Munich Re and Lloyd’s have secured the top positions in AM Best’s latest rankings of the world’s largest reinsurers, with foreign currency exchange gains against the U.S. dollar playing a pivotal role. The results are part of the Best’s Market Segment Report, "World’s 50 Largest Reinsurers," released ahead of the Rendez-Vous de Septembre in Monte Carlo.

Munich Re reclaimed the number one spot among IFRS 17 reporting reinsurers, reversing its position from Swiss Re. This shift was supported by the Euro’s strong performance relative to the U.S. dollar. Meanwhile, Lloyd’s moved to the top of the non-IFRS 17 ranking, overtaking Berkshire Hathaway, driven by premium growth and the appreciation of the British Pound against the U.S. dollar.

What the Numbers Show

The financial health of the leading IFRS 17 reporters has strengthened significantly. The top five players in this category reported a weighted combined ratio of 80.0% for 2025, marking a sharp improvement from the prior year’s figure of 84.9%. This divergence indicates that despite modest declines in reinsurance revenue year-over-year for both IFRS 17 and non-IFRS 17 groups, underwriting discipline and favorable loss ratios have enhanced profitability for the sector's largest entities.

The depreciation of the U.S. dollar against most currencies in 2025 enhanced the rankings of many non-USD-denominated reinsurers. AM Best converts all reporting currencies to USD using the foreign exchange rate as of the date of the companies’ financial statements. This marks the third full year of ranking-related financial information being reported under IFRS-17, providing clearer insights into year-over-year performance.

Underwriting and Loss Landscape

Underwriting performance remained strong in 2025, even as some material price softening occurred. The industry generated record levels of capital, fueled by multiple years of strong profitability following rate hardening and more favorable terms and conditions. Investment returns further supplemented these operating profits.

Christopher Pennings, senior financial analyst at AM Best, noted that risk-adjusted rate reductions occurred during recent renewal cycles, but terms and conditions largely held strong. Dan Hofmeister, associate director at AM Best, highlighted that the absence of significant U.S. hurricane activity in 2025 improved profitability, with no major hurricane making landfall.

However, the industry faced headwinds from other catastrophic events. Severe convective storms in the United States resulted in loss estimates reaching as much as USD 61 billion, according to broker estimates. Additionally, the California wildfires, which occurred within weeks of the new year, represented the largest insured loss of 2025. This event eroded a significant portion of exposed reinsurers’ allotted catastrophe capacity for the year, contributing to weak quarterly results early in the period after a profitable 2024.

Global dedicated reinsurance capital is projected to reach a new record level of USD 705 billion in 2026, according to AM Best’s latest market segment report. This follows a 9% year-over-year increase in 2025, when total dedicated capital rose to USD 663 billion. The expansion highlights the continued strength of traditional reinsurers and the diversification of capital deployment across the sector.

The report, titled "Reinsurance Capital Reaches New Highs as Risk Budgets Decline," notes that traditional reinsurers generated another year of strong underwriting and investment earnings. This performance allowed the industry to retain capital even as companies returned value to shareholders and pursued new growth opportunities. Simultaneously, the insurance-linked securities (ILS) market continued to attract investors seeking exposure to insurance risk that remains relatively uncorrelated with broader financial markets.

What the Numbers Show

A key divergence emerged between available and required capital in 2025. While available capital grew significantly, required capital remained relatively flat. Dan Hofmeister, associate director at AM Best, noted that this divergence has created increasingly substantial capital buffers across the sector. These buffers provide reinsurers with greater flexibility to absorb volatility, pursue growth opportunities, return capital to shareholders, or redeploy capital into primary and specialty insurance markets.

Furthermore, catastrophe probable maximum loss (PML) exposure remained broadly stable during 2025. Despite the expansion of available capital, the industry did not materially increase its aggregate catastrophe exposure. Consequently, catastrophe risk budgets—measured as catastrophe PML exposure relative to available capital—continued to decline. Patrick Cyphers, financial analyst at AM Best, stated that this decline indicates reinsurers are carrying less catastrophe exposure relative to their capital bases, providing additional protection against large loss events.

Capital Composition and Projections

The total dedicated reinsurance capital comprises traditional reinsurance capital and third-party capital. AM Best estimates traditional capital, while Guy Carpenter estimates third-party capital.

Traditional reinsurance capital increased to an all-time high of USD 540 billion at year-end 2025, up from USD 500 billion in 2024. It is projected to rise by 6.5% to USD 575 billion in 2026. Third-party capital also reached a record level in 2025, increasing to USD 123 billion. The estimate for 2026 stands at USD 130 billion, driven predominantly by strong investor demand for catastrophe bonds and other ILS instruments.

Bermudian reinsurers continued to expand their share of the global market, representing approximately 16% of global reinsurance market capital in 2025, up from 15% in the prior year.

Industry Outlook

AM Best will release additional reports ahead of the Rendez-Vous de Septembre in Monte Carlo, including rankings of top global reinsurance groups and in-depth analyses of Lloyd’s, life/annuity, health, and regional reinsurance markets. AM Best will host its annual reinsurance market briefing on Sept. 6, 2026, at 10:15 am (CEST) during the event.