Although preliminary results for 2025 indicate growth and improvement across both property & casualty (P&C) and life insurance in the German market, Moody’s has cautioned that underwriting profitability is likely to ease in 2026, assuming normalised natural catastrophe claims and more moderate claims inflation.
According to Moody’s, the German insurance industry association (Gesamtverband der Deutschen Versicherungswirtschaft, or GDV) reported preliminary 2025 results showing a marked improvement in P&C insurers’ underwriting profitability, alongside solid growth in life insurance premiums.
With this in mind, the rating agency affirmed the outlooks on both sectors as stable.
Notably, the German P&C sector’s gross combined ratio (claims and costs as a share of premiums) for the year strengthened to 91% from 96% in 2024.
As per Moody’s, the improvement reflected a rise in prices, which offset claims inflation. As mentioned, P&C insurers also benefited from below-average natural catastrophe claims of €2.6 billion, down sharply from €5.5 billion the previous year.
“Assuming normalised natural catastrophe claims and more moderate claims inflation, underwriting profitability will likely weaken somewhat in 2026,” Moody’s observed.
Meanwhile, in the life sector, gross premiums rose strongly, driven mainly by a surge in single premiums.
“Interest rates and the shape of the yield curve continue to be accommodative for German life insurers, supporting investment returns and making their savings policies more attractive relative to bank deposits.” Moody’s added.
Legislative initiatives are said to be underway to strengthen private retirement savings, with a replacement for the struggling Riester pension product expected in 2027.
While this could support life insurers’ growth prospects, the new product’s mandated features and strict fee caps, still under discussion, may limit insurers’ flexibility.
Moody’s noted that these constraints could give an advantage to asset managers, whose product offerings and distribution models differ from traditional life insurance.
