Profitability in the property and casualty (P&C) reinsurance industry appears to have peaked as competition intensifies across all business segments, credit ratings and risk analytics provider Moody’s Ratings said.
Moody’s reports that by 2025, the combined ratios of Europe’s four largest reinsurers, Hannover Re, Munich Re, SCOR and Swiss Re, will benefit from falling claims related to natural disasters, while investment returns continue to rise.
However, Moody’s highlighted that these reinsurers reported declines in risk-adjusted pricing in most segments during the January 2026 renewal period, including specialty insurance, previously considered a key area of ​​diversification. Moody’s expects this to result in underwriting rates falling by approximately two to four percentage points in 2026.
Moody’s further noted that life reinsurance will continue to make an important contribution to overall earnings. On average, the four reinsurers’ life contract services margins fell 4%, partly due to adverse currency movements, which Moody’s interpreted as modest weakness in future life reinsurance profits.
While some life insurance portfolios remain under pressure, Moody’s said updates to provisioning assumptions over the past two years are expected to support reported results in the period ahead.
Moody’s observed a slight increase in interest in natural catastrophe risks, with some reinsurers reducing retrocession protection and others taking on additional risk, indicating continued participation in this area.
Meanwhile, European reinsurers are generally reducing their exposure to U.S. casualty risk, although individual companies are doing so differently. Moody’s highlighted that despite these strategic changes, solvency ratios remain strong and the largest reinsurers continue to strengthen their balance sheets by increasing provisions.
In terms of geopolitical impacts, Moody’s assesses that the direct impact of the current conflict in the Middle East on major reinsurers is likely to be limited. Moody’s said the main risk lies in the marine insurance sector, but any potential losses are expected to remain manageable due to the high diversification of these companies.
Moody’s analysis highlights that while P&C insurance profitability remains strong, competitive pressures and selective risk exposures could slow growth even as balance sheets across the industry strengthen.
