According to Moody’s Ratings, a provider of credit ratings and risk analysis, profitability in the property and casualty (P&C) reinsurance sector appears to have reached its peak as competition intensifies across all lines of business.
Moody’s reports that in 2025, the combined ratio of four major European reinsurers, Hannover Re, Munich Re, SCOR, and Swiss Re, benefited from lower claims related to natural catastrophes, while investment returns continued to rise.
However, Moody’s highlights that these reinsurers reported declines in risk-adjusted pricing across most segments during the January 2026 renewals, including in specialty insurance, previously regarded as a key area for diversification. Moody’s expects this to lead to a reduction of approximately two to four percentage points in their underwriting ratios in 2026.
Moody’s further notes that life reinsurance will continue to be a significant contributor to overall earnings. On average, the four reinsurers recorded a 4% decrease in their life contractual service margin, partly driven by adverse currency movements, which Moody’s interprets as a modest softening of future life reinsurance profits.
While some life portfolios remain under pressure, Moody’s indicates that updates to reserving assumptions over the past two years are expected to support reported results in the coming periods.
Moody’s observes a slight increase in appetite for natural catastrophe risks, with some reinsurers reducing their retrocession protection and others taking on additional risk, signalling ongoing engagement in this segment.
At the same time, European reinsurers are generally scaling back exposure to US casualty risk, although approaches differ across companies. Moody’s emphasises that despite these strategic adjustments, solvency ratios remain robust, with the largest reinsurers continuing to strengthen their balance sheets through enhanced reserves.
In terms of geopolitical impacts, Moody’s assesses that current conflicts in the Middle East are likely to have a limited direct effect on the major reinsurers. According to Moody’s, the main exposure is within the marine insurance sector, but any potential losses are expected to remain manageable due to the high degree of diversification among these companies.
This analysis from Moody’s underlines that while P&C profitability remains strong, competitive pressures and selective risk exposures may moderate growth, even as balance sheets are reinforced across the sector.
