A recent report from Autonomous showed that growth momentum for European reinsurers has stalled after several years of outperformance, with analysts warning that maintaining top-line growth and margins will become increasingly challenging in 2026 due to a weak pricing cycle.
Analysts say reinsurers will stall in 2025, pressured by a weak pricing cycle, foreign exchange headwinds and revenue challenges.
Autonomous noted that all reinsurers underperformed the industry, although there were significant differences. Among Europe’s “big four” reinsurers, SCOR was the strongest performer, up 23% in absolute terms, followed by Munich Re (+19%) and Hannover Re (+11%), while Swiss Re lagged behind, up only 3%.
The London market’s performance varied even more, ranking at the bottom of the sub-sector performance chart.
Autonomous added that investor concerns about pricing in the property and casualty reinsurance market will intensify through 2025, as a period of excess profitability leads to overcapacity, compounded by continued inflows of alternative capital. Exposure to the most volatile categories varies widely across companies.
Analysts note that the January 2026 renewal season is in full swing and the market is bracing for price declines in a number of high-profile business areas, primarily in real estate.
Looking ahead, Autonomous expects reinsurers to be affected by softer pricing cycles, as they will be in 2025. While analysts believe reinsurers have strengthened their balance sheets, earnings growth may have peaked and diversification and capital flexibility will become core growth advantages, factors that underpin Autonomous’s preference for Munich Re (OP). The company downgraded Swiss Re’s rating to UP from OP.
The analysts said: “We expect revenue growth to be low but still positive, but we believe the pace of earnings growth poses a greater challenge for reinsurers, particularly against the backdrop of strong growth in the market and wider industry.
“For reinsurers, the cycle is softening, even from an abnormal peak, and this backdrop will naturally shift ROE expansion towards sustainment or even defense. Despite the apparent continued weakness, pricing appears to have sufficient embedded margins that we expect ROE to remain stable in 2026 and 2027, with 17.8% on average for reinsurers and 15.1% for London Market equities. Alternatively, we estimate ROE for 2027 to be just below 2025 for reinsurers and London Market equities. 1.6 percentage points and 1.1 percentage points lower year-on-year.”
The Autonomous Analysts concluded: “Much like 2025, we believe reinsurers are likely to be hit by a variety of factors. In 2025, the soft cycle narrative that was already in its infancy at the beginning of the year is further exacerbated by a large increase in capital and capacity. Absent a major capital depletion event, we believe this direction of the cycle will continue unabated – recall the false hopes of cycle stabilization following the California fires.
“Typically, we project a ‘normal’ cat experience in our future modeling assumptions. As cyclical pressures increase, this further creates a greater challenge for companies to pursue top-line growth targets while maintaining margins – especially compared to comparative years such as 2025, which is ultimately favorable from a large loss perspective. As we described above, we expect net income growth to slow, typically reaching the low single-digit percentage range at most, with few outliers.”