Munich Re has described traditional reinsurance as the “cornerstone” of capacity, supporting diversified portfolios and a broad range of client needs more than ever before.
In new commentary ahead of Baden-Baden, the firm said traditional reinsurance capital has increased relative to alternative capital, with the ratio rising from 3.5 in 2017 to almost 4 in 2026.
Clarisse Kopff, Member of the Board of Management responsible for P&C Reinsurance in Europe and Latin America, added, “The world faces ever-increasing risks. Traditional reinsurance combines dependable capital with deep expertise, innovative solutions for an increasingly complex risk landscape, and the financial strength to pay large claims when they arise. Few can deliver this combination. Munich Re can.”
By retaining risk on its own balance sheet, Munich Re said it is positioned to make capacity available independently of retrocession. The firm added that this commitment is particularly valuable when capacity is scarce.
Kopff continued, “Reliable capital and liquidity are only part of the value we bring. As a long-term partner, Munich Re combines global market knowledge and forward-looking insights with in-depth analysis of claims trends. We also invest in new risk solutions and build markets from the ground up, as we have done in cyber.”
Elsewhere in its commentary, Munich Re highlighted increasing exposure as a key driver of natural catastrophe losses in Europe, where non-peak perils accounted for around 70% of insured losses over the past 20 years. The effects of climate change are also becoming increasingly visible.
The global reinsurer continued, “Temperatures in France reached 3.6 degrees above average in the summer of 2026. A cumulative burned area measuring more than 10.000 km² across Europe in 2025.
“Signals of climate change keep getting stronger. Risks are on the rise, and this is not only evident in heatwaves and continued hail events, but also in cyber threats, persistent cost pressure and single hazards that trigger interconnected impacts.
“Insurers must navigate this increasingly complex risk landscape. This underscores the value of traditional reinsurance more than ever, as longer benign loss periods do not alter the long-term trajectory of these risks.”
Kopff said, “Periods of lower losses in natural catastrophes must not lead to complacency about the risks ahead. We have seen insured natural catastrophe losses in Europe rise by an average of 5% per year since 1980, with the rise accelerating in the last decade.
“Our clients need a partner they can rely on across market cycles, including when major events put their balance sheets under pressure. We combine meaningful capacity with the expertise to understand changing exposures and the ability to respond when losses occur.”
