On the back of strong performance in 2025, Fitch expects Europe’s top four reinsurers to maintain balance sheet resilience through 2026, driven by strong capital generation and strengthening reserves, despite a “deteriorating” outlook for the global reinsurance industry and changing macroeconomic conditions.
This review follows strong performance from Munich Re, Swiss Re, Hannover Re and SCOR, who reported a record average return on equity of 19.6% in 2025, up from a record high of 17.1% in 2023.
Sustained underwriting performance and solid investment returns across most business lines support profitability amid favorable market conditions over the long term.
The peer group’s average property and casualty (P&C) reinsurance combined ratio improved to 79.8% in 2025 from 85% in 2024. This reflects better natural disaster losses and natural disaster losses.
“Fitch Ratings expects strong capital generation and reserve strengthening by peers over the past three years to support balance sheet resilience. This is consistent with our ‘deteriorating’ global reinsurance industry outlook, even as pricing and macro conditions become less supportive. We view balance sheet resilience and disciplined pricing cycle management as key credit differentiators,” the rating agency said.
Fitch noted that while 2025 was a record year, property and casualty insurance revenue growth has begun to stall, and it expects these companies to prioritize profitability over volume in 2026 as the pricing cycle weakens.
The picture for life and health earnings in 2025 is more mixed, but generally supported by strong, predictable contract services profit releases. The agency noted that Swiss Re’s assumption update would have a smaller impact on 2024 results than SCOR, and that both reinsurers are well-positioned to deliver more stable earnings in 2026.
Fitch expects recurring income to continue to support returns, assuming no material deterioration in asset quality.
In September 2025, Fitch revised its outlook for the global reinsurance industry from “neutral” to “deteriorated”, a change that reflected expectations for weaker operating conditions in 2026.
“We believe the underlying market dynamics underpinning our ‘worsening’ outlook will persist in 2026. Sufficient capacity and increasing competition across most property sectors will continue to gradually erode prices,” the analysts said.
Assuming major losses remain within budgeted levels, rising claims costs, particularly as a result of more frequent and severe catastrophe losses and ongoing social inflation, will put pressure on underwriting margins.
Conflict in the Middle East creates macroeconomic uncertainty. Fitch expects the conflict to inflict limited, manageable losses on reinsurers, mainly in specialized areas such as political violence, energy, aviation and maritime.
Fitch said this assessment depends largely on the duration and scope of the conflict. In addition, prolonged high oil prices, coupled with increased economic and financial market volatility, may indirectly impact reinsurers through higher loss cost inflation, depressed asset valuations and greater default risk.
Europe’s top four reinsurers post record average return on equity in 2025: Fitch ranks first on ReinsuranceNe.ws.