Reinsurers have outperformed the wider market since the start of the Iran conflict, with the sector remaining resilient as it enters Q1 2026 despite facing currency headwinds and a more competitive pricing environment, according to RBC Capital Markets.
Of Europe’s big four reinsurers, SCOR has reportedly been the top performer, driven by the improved capital generation outlook while it continues to strengthen its P&C reserve buffers.
The company’s Life business is making meaningful progress in its turnaround efforts. Analysts believe there is potential for a modest re-rating by reporting in- line quarters with new targets to be given later in the year.
In contrast, Hannover Re has been highlighted as the most defensive stock in the sub-sector.
While its long-term track record and significant P&C reserve buffers support earnings growth, RBC noted that its premium multiple looks full given industry headwinds.
Munich Re and Swiss Re are slightly behind the broader sector, although they continue to perform at least as well as the market, according to the report. A weaker CHF has been a headwind for Swiss Re.
“SCOR will be the first reinsurer to report its results. The likely focus will be on the outcome of the April renewals and the outlook for the rest of the year,” RBC stated.
Adding: “We set out our expectations for the April renewals by company below. We expect materially more negative price updates versus January partly because April renewals have been reported by reinsurance brokers to have been more competitive than January, and partly because nat cat is a higher part of the renewal in April than January, at about one-third versus 10%+.
“We have assumed similar growth differentials by company as at January 2026, with Hannover Re and Scor more willing to grow from lower market shares, and with Munich Re and Swiss Re ceding share to support margins.”
RBC has upgraded its FY26 earnings per share (EPS) forecast by 1% across the sector. This adjustment has been driven by currency movements and higher profits due to below budget natural catastrophe losses in early 2026, which have helped offset higher man-made losses and slower top-line growth.
“In our out-years, we have taken a more cautious view of P&C margins, as pricing pressures continue, and competition remains elevated,” said analysts.
Concluding: “FX movements have not been favourable to the reinsurers over the last 12 months. The USD has weakened against the EUR by 14% and 16% against CHF since the start of 2025. The average USD rate has weakened against the EUR by 11% Y/Y, with Scor guiding for a high-single digit top-line headwind in Q1 2026.”
