Large EMEA-based reinsurers’ underwriting margins and overall profitability are likely to decline over 2026-2027 as pricing softens further, but they should remain sufficient to cover the sector’s cost of capital, according to S&P.
In a new report outlining performance trends for 50 rated EMEA-based publicly listed or debt-issuing re/insurers, S&P found that most major rated insurers and reinsurers reported robust operational and financial results in the first half of 2026.
“Most major rated insurers and reinsurers in EMEA reported robust operational and financial results in the first half of 2026. Re/insurers have demonstrated that they can consistently deliver on their financial targets even when facing economic uncertainty and geopolitical instability,” said S&P Global Ratings credit analyst Jure Kimovec.
Looking ahead, S&P suggested that ample capacity among traditional reinsurers and alternative capital providers will drive further softening in 2027.
However, healthy property and casualty reinsurance combined ratios, solid net investment income, and strong life reinsurance earnings should still cover the sector’s cost of capital, provided that natural catastrophe and large man-made losses remain within annual budgets.
S&P said the first-half operating performance of EMEA re/insurers supports its base-case assumptions for 2026 and 2027, despite volatile markets, political uncertainties, and some softening of prices in reinsurance and commercial lines.
Underwriting margins in non-life re/insurance generally remain robust, while life insurance margins are resilient. In non-life insurance lines, claims from natural catastrophes and large losses have been limited.
Strong revenue growth is driving profit growth at insurers, S&P noted.
While the business environment for non-life retail insurance should remain favourable, softening reinsurance prices in 2027 should create some headwinds for reinsurers.
Capital ratios across the sector generally remain high, bolstered by strong operating performance, robust underwriting margins, and rising yields on prudent investments.
S&P continued, “As we move through the second half of 2026, we expect that re/insurers will remain resilient to the capital-market volatility and rising inflation weighing on their performance.
“On the positive side, rising yields will push up investment income. For many rated re/insurers, the second half of the year is more prone to seasonal natural catastrophes and therefore to an uptick in claims.
“However, we believe that prudent balance sheets and solid reinsurance protection will prevent a material deterioration in underwriting margins.”
