The mainstream media is awash with stories about geopolitics and how protectionism, trade tariffs and war transmit to energy prices and inflation.
Many articles mainly focus on consumer effects such as higher food and fuel prices or the return implications caused by price fluctuations on global financial markets, but capital allocation and global capital flows are impacted too.
At the extreme, geopolitics is influencing where countries keep one of their most precious stores of value. The Netherlands shifted around 86 tonnes of gold out of North America in 2026, citing growing geopolitical unrest, amid wider European concerns over the reliability of the United States (US) under President Donald Trump.
Germany, which had already repatriated hundreds of tonnes from New York, faced renewed calls in 2026 to bring home the 1,236 tonnes it still holds there because of deteriorating trans-Atlantic relations and concerns over the Trump administration. France, meanwhile, sold its remaining New York-held gold and replaced it with gold held in Paris, although its central bank said the decision was technical rather than political.
Shifts in national gold reserves make for good press, but there are other sources of capital seeking new outlets in response to geopolitical uncertainty. In its recent Snapshot Guide to the Reinsurance Renewal, global professional services firm Aon Plc estimated US$800 billion in global reinsurance capital on 30 June 2026, including around US$144.5 billion in third-party capital. Insurance and reinsurance professionals are watching closely for any changes in how this capital is directed.
Capital flows under pressure
They may find some answers in Global Financial Fragmentation: Implications for the Insurance and Reinsurance Industries, published in September 2026 by the Geneva Association, a global association of insurance and reinsurance chief executives.
The report explores the insurance and reinsurance implications of global financial fragmentation. Its executive summary is unequivocal, noting that “geoeconomic fragmentation is now slowly extending into finance, driven by regulatory divergence, increased use of sanctions, and shifts in capital allocation.”
In his foreword, Jad Ariss, managing director of the association, said that today’s geopolitical considerations were “challenging the international economic order that has prevailed since World War II”. He noted that global financial fragmentation was evidenced by the declining share of central bank foreign-exchange reserves held in US dollars and foreign direct investment shifting towards geopolitically aligned countries, among other trends.
Financial market fragmentation was recognised as “strategically significant” for insurers and reinsurers “whose business models rely on international diversification, cross-border risk transfer, integrated investment markets, and dependable liquidity channels”. If you add exchange-rate volatility and the complexity in navigating multiple regulatory regimes, you have a neat summary of the challenges facing insurers and reinsurers in Africa.
The continent gets just one mention in this 60-pager, and the context helps explain why. Of the £49.3 billion (US$65.3 billion) in 2024 London company market premium shown by territory, Africa accounts for just £0.6 billion (US$795 million), or around 1.2%. And Swiss Re’s sigma data puts Africa at an even smaller 0.5% of global non-life insurance premiums.
Global Financial Fragmentation builds on its predecessor report, published in 2025, to “examine the implications of financial fragmentation for the insurance sector”. It does so by considering reinsurance capacity allocation across jurisdictions; primary insurers’ balance-sheet management; and the behaviour of asset prices, interest rates and market liquidity.
At an aggregate level, there were few clear signs of global financial fragmentation along geopolitical lines. However, putting a lens on the direction of cross-border capital flows proved telling.
“Investors generally allocate a smaller share of capital to recipient countries that have greater differences in foreign policy compared to their country of origin,” the report said.
South Africa is quite familiar with this challenge given its ongoing diplomatic wrangle with the US, which is unhappy with aspects of the country’s domestic and foreign policy. On 22 September, US ambassador to South Africa Leo Brent Bozell III, said the US Export-Import Bank and International Development Finance Corporation were holding back billions of dollars in potential financing while South Africa’s Expropriation Act remains a concern for Washington.
Fragmentation hits reinsurance
Geopolitical Financial Fragmentation found four main transmission channels through which financial fragmentation could affect the insurance and reinsurance industries. The first, labelled cross-border diversification, will “affect internationally active insurers’ ability to pool risks across countries” while the second channel focuses on how risk transfer and reinsurance networks will affect capital sharing across jurisdictions.
Data from Atlas, London Market Group and Swiss Re shows that less than 4% of global direct insurance premiums were written through insurance hubs, compared to close to 40% for reinsurance. “Regulation is the primary determinant of whether insurers can write business cross-border, creating significant trade barriers,” the report stated.
The insights shared here will be quite familiar to insurance professionals in Africa. They know all too well that major global players underwrite on the continent through local entities or branches, often using workarounds to place risks.
“To the extent geopolitical tensions spark new or more restrictive rules on international insurance business, geographical diversification gains may fall, causing risk concentration, expected losses, and associated technical reserves to rise,” the report warned. Compliance costs and operational risks will rise too.
Reinsurance remains the “principal mechanism through which insurance markets share risk internationally”. But growing financial fragmentation could impair reinsurers’ abilities to source appropriate assets to back their liabilities. The main reasons include restrictions on cross-border financial flows, ring-fencing of locally held capital or constraints due to sanctions or geopolitical alignment.
Per the report: “In extreme cases, fragmentation may lead to regionalisation of reinsurance markets, increasing concentration risk within country blocs.”
Africa’s capacity challenge
According to Africa Re, around 70% of the continent’s reinsurance premiums still leave Africa each year. That dependence on international capacity means global financial fragmentation could have a more direct impact on African markets than the headline figures for Africa’s share of global premiums might suggest.
If geopolitical tensions increasingly influence where capital can be deployed, African insurers could face a narrower pool of international reinsurers willing or able to take on their risks. Sanctions, capital controls, ring-fencing requirements and divergent regulatory regimes could make cross-border capacity more expensive or difficult to access. The result could be greater concentration among the reinsurers that remain active in individual markets.
Building regional resilience
Greater regional risk-sharing could become increasingly important if global markets become more fragmented. Stronger regional reinsurance arrangements and risk pools could provide an additional layer of capacity, while regulatory harmonisation could make it easier to move capital and risk across African markets.
The final two transmission channels deal with investment strategy and liquidity. It is argued that financial fragmentation could narrow the range of assets available to back liabilities, thereby increasing home bias and complicating insurers’ management of currency and credit exposures. Accessing foreign currency funding, mobilising cross-border collateral or rebalancing portfolios would all become more difficult during periods of market stress.
Africa’s insurers and reinsurers account for a small slice of global insurance premium, yet their dependence on international capacity potentially leaves them more exposed to disruption than the deeper insurance markets of America, Europe and Asia-Pacific. In this context, brands that wish to excel on the continent would do well to heed Ariss’ call for preparedness.
He encouraged insurers and reinsurers to “reconfigure [their] risk-transfer approaches, adapt capital structures, reposition investment strategies, and strengthen liquidity and balance-sheet resilience” to withstand the shift. He also singled out regulators as instrumental in enabling “the insurance industry to continue helping economies withstand shocks in an increasingly uncertain world”.
As global financial links become more fragmented, the ability of African re/insurers to combine international capacity with stronger regional and local resilience could become increasingly important to the continent’s ability to absorb shocks.