Reinsurers have outperformed since the outbreak of the Iran conflict, with the sector remaining resilient heading into the first quarter of 2026 despite currency headwinds and a more competitive pricing environment, RBC Capital Markets said.
SCOR was reported to be the top performer on the back of improved capital generation prospects, while continuing to strengthen its property and casualty insurance reserve buffers.
The company’s life business is making meaningful progress in turning a profit. Analysts believe a modest re-rating is possible with reporting quarterly numbers and a new target later this year.
In comparison, Hannover Re is considered the most defensive stock in this subsector.
While its long track record and significant property and casualty reserve cushion support earnings growth, RBC noted that its premium multiples look full given industry headwinds.
Munich Re and Swiss Re lagged slightly behind the overall industry, although they performed at least as well as the market, the report said. The weak Swiss franc has been a headwind for Swiss Re.
“SCOR will be the first reinsurer to report results. The focus will likely be on April renewal results and the outlook for the remainder of the year,” RBC said.
Added: “We have set out our expectations for April renewals by company below. We expect more negative price updates compared to January, partly because reinsurance brokers report April renewals to be more competitive than January, and partly because the proportion of natural cats in renewals in April is higher than in January, at about one-third compared with more than 10%.
“We assume growth differentials across companies will be similar to January 2026, with Hannover Re and Scor preferring to grow from lower market share, while Munich Re and Swiss Re are giving up share to shore up margins.”
Royal Bank of Canada (RBC) raised its industry-wide fiscal 2026 earnings per share (EPS) forecast by 1%. The adjustment was driven by higher profits due to currency fluctuations and lower-than-budgeted natural catastrophe losses in early 2026, which helped offset rising man-made losses and slower revenue growth.
“We have taken a more cautious approach to P&C margins over the past few years as pricing pressure persists and competition remains intense,” analysts said.
The conclusion: “Foreign exchange movements have been negative for reinsurers over the past 12 months. Since the start of 2025, the U.S. dollar has fallen 14% against the euro and 16% against the Swiss franc. The U.S. dollar has fallen 11% against the euro year-over-year and Scor expects high-single-digit revenue headwinds in the first quarter of 2026.”
