On the back of a strong 2025, Fitch expects the four largest European reinsurers to maintain balance-sheet resilience into 2026, driven by strong capital generation and reserve strengthening, despite a ‘deteriorating’ global reinsurance sector outlook and shifting macroeconomic conditions.
This assessment follows a robust year for Munich Re, Swiss Re, Hannover Re, and SCOR, where they reported a record average return on equity of 19.6% in 2025, above 2023’s previous high of 17.1%.
Sustained underwriting results across most business lines and steady investment returns supported profitability in prolonged favourable market conditions.
In 2025, the peer group’s average property and casualty (P&C) reinsurance combined ratio improved to 79.8%, down from 85% in 2024. This reflected better attritional performance and below-budget natural catastrophe losses.
“Fitch Ratings expects the peers’ strong capital generation and reserve strengthening of the past three years to support balance-sheet resilience. This is even as pricing and macro conditions become less supportive, consistent with our ‘deteriorating’ global reinsurance sector outlook. We view balance-sheet resilience and disciplined pricing-cycle management as key credit differentiators,” said the ratings agency.
Fitch noted that while 2025 was a year of record highs, P&C revenue growth has begun to stall, and it expects these firms to prioritise profitability over volume in 2026 as the pricing cycle softens.
Life and health earnings in 2025 were more mixed but were generally supported by strong, predictable contractual service margin releases. Swiss Re’s assumption updates affected results to a lesser extent than SCOR’s in 2024, and both reinsurers are well positioned for more stable 2026 earnings, the agency noted.
Fitch expects recurring income to remain supportive of returns, assuming no material asset-quality worsening.
In September 2025, Fitch revised its global reinsurance sector outlook from “neutral” to “deteriorating,” a shift that reflects expectations of weaker operating conditions in 2026.
“We believe the fundamental market dynamics underpinning our ‘deteriorating’ outlook will persist in 2026. Abundant capacity and rising competition across most property lines will continue to gradually erode prices,” analysts stated.
Rising claims costs, notably from more frequent and severe catastrophe losses and persistent social inflation, will pressure underwriting margins, assuming major losses remain within budgeted levels.
The conflict in the Middle East introduces macroeconomic uncertainty. Fitch anticipates this conflict will result in limited, manageable losses for reinsurers, primarily in specialty areas such as political violence, energy, aviation, and marine.
This assessment is highly dependent on the duration and scope of the conflict, Fitch stated. Furthermore, an extended period of high oil prices, coupled with increased economic and financial market volatility, could indirectly impact reinsurers through higher loss-cost inflation, depressed asset valuations, and a greater risk of defaults.
