European insurers are expected to deliver solid profitability through the remainder of 2026 despite subdued growth, according to S&P Global Ratings, the credit ratings, market intelligence and financial research firm.
The agency said investment income is gradually improving, although returns remain constrained as insurers continue replacing lower-yielding bonds purchased before 2022.
“We believe the European insurers we rate are well placed to weather potential challenges such as inflation and volatility risk in financial markets. This is due to their focus on technical profitability, prudent asset allocation and material capital surplus,” added S&P Global Ratings Credit Analyst Voker Kudszus.
In its latest report, European Insurance 2026 Mid-Year Outlook: Profitability To Hold Up, S&P Global Ratings said insurers across the region continue to benefit from disciplined underwriting, conservative investment strategies and strong capital positions, helping to support earnings despite an uncertain economic backdrop.
According to S&P, trends are beginning to diverge across Europe’s insurance markets. The agency said pricing pressure in commercial insurance, which first emerged in the UK, is now spreading across continental Europe.
It also noted that the absence of significant natural catastrophe losses during the first half of 2026 could lead to increased pressure on reinsurance pricing. In life insurance, S&P expects France, Italy and Spain to continue driving growth, while most other European markets are likely to remain broadly stable.
S&P said the conflict in the Middle East is unlikely to have a meaningful direct impact on the European insurance sector, citing insurers’ limited reliance on physical goods and their relative insulation from oil price movements.
The agency added that the essential nature of insurance for households and businesses provides a degree of resilience during periods of economic weakness. It also noted that capital markets have remained largely stable despite ongoing geopolitical conflicts, while insurers’ prudent investment portfolios continue to support profitability. Access to capital markets has also remained intact, providing the sector with continued financial flexibility.
“Many European insurers displayed solid operating performance in the first half of 2026 and we expect this trend to continue on: stable life margins; non-life technical profitability at a robust level; and reinsurance rates softening, but still carrying solid margins,” said Kudszus.
S&P also found that some of Europe’s largest international insurers, including leading global multiline insurers and major reinsurers, continue to outperform the wider market. According to the agency, these companies have delivered stronger operating performance than the sector average, with results remaining broadly resilient despite geopolitical tensions and economic uncertainty.
The agency’s analysis of a sample of major Europe-based global multiline insurers and reinsurers found that private credit represented around 11% of investment portfolios on a weighted average basis.
While this allocation is above the broader European market average, S&P Global Ratings said it does not consider these portfolios to be inherently riskier because the majority of private credit holdings are mortgage-related assets, which it regards as relatively low risk.
