Fitch Ratings, the international credit ratings and research agency, has said that Europe’s four largest reinsurers posted stronger earnings in the first quarter of 2026, although overall revenue growth declined as market conditions became less favourable.
In its latest assessment, Fitch Ratings said Munich Re, Swiss Re, Hannover Re and SCOR SE recorded an average annualised return on equity of 21.4% during Q1 2026, up from 17.5% in the same period last year.
The agency attributed the improvement mainly to stronger underwriting performance within property and casualty (P&C) business, supported by a lower level of major claims activity.
Fitch Ratings reported that combined revenue across the four reinsurers fell by approximately 5% year-on-year. The decline was linked to lower pricing and reduced business volumes at renewals within the P&C market, together with the effect of a weaker US dollar. The agency also noted that pricing pressure continued to increase during the April 2026 renewals, with average price reductions reaching 3.7%.
Despite softer pricing conditions, Fitch Ratings said the four reinsurers remain in a strong position to achieve their profitability objectives for 2026. According to the agency, the sector is expected to continue prioritising underwriting discipline and earnings quality over expansion as market and macroeconomic conditions become more challenging.
Fitch Ratings stated that average P&C combined ratios improved to 77.5% in Q1 2026, compared with 87.2% a year earlier, exceeding full-year targets across the peer group. The agency said the stronger underwriting outcome was mainly due to lower large-loss claims, unlike Q1 2025 when losses linked to the Los Angeles wildfires were significantly above quarterly expectations.
The report also highlighted sizeable discounting benefits, ranging from 9.5% to 12%, alongside favourable reserve developments from previous underwriting years. Fitch Ratings noted that some reinsurers chose to strengthen reserves further, particularly Hannover Re, which increased prudence within its balance sheet.
Fitch Ratings said SCOR, Munich Re and Swiss Re all added reserves relating to the Iran–US conflict, with Swiss Re recording the largest reserve increase at USD400 million. Hannover Re, meanwhile, relied on unused large-loss budget allowances while continuing to reinforce its overall reserve resilience.
Within life and health (L&H) operations, Fitch Ratings described performance as varied but generally stable. The agency said contractual service margin (CSM) releases remained steady across the sector, while mortality-related experience was positive for most of the reinsurers.
Hannover Re and SCOR both reported higher levels of new business CSM compared with the previous year, supporting future earnings potential. Swiss Re was the only company to record a decline in CSM, as releases exceeded new business generation during the quarter.
Fitch Ratings added that investment returns remained supportive overall. Average return on investment stood at 3.4% in Q1 2026, slightly below the 3.7% recorded in Q1 2025. The agency said recurring investment income continued to benefit from higher reinvestment yields, although this was partly offset by negative fair-value movements, particularly at Munich Re.
According to Fitch Ratings, capital strength across the four European reinsurers remained robust, with solvency ratios either meeting or exceeding the upper end of their target ranges.
