The largest European reinsurers achieved a combined earning of €10.2 bn in 2023, more than double their earnings in 2022, attributed to higher prices and improved investment returns.
Analysts at Moody’s Investors Service report underscores that Munich Re, Swiss Re, Hannover Re, and SCOR exhibited robust underwriting results.
Despite a high number of natural disasters in 2023, the companies managed to reduce their exposure by setting higher coverage limits (see Largest Global Reinsurance Groups in the World).
They also benefited from recent substantial price increases. They strengthened their claims reserves to enhance financial stability in case of unexpected losses.
Global reinsurers have tightened their terms and conditions to limit their aggregate covers and the lower layers of their natural catastrophe protection, largely in response to increasingly frequent and volatile weather-related losses due to climate change.
European reinsurers have become more exposed to weather-related losses due to reinsurers providing less cover against medium-sized natural catastrophe risks
This leaves insurers much less protected against secondary peril events. In addition, higher reinsurance prices have led some insurers to buy less cover.
Global reinsurers are cutting back on the cover they provide against medium-sized natural catastrophe risks due to investor pressure after several years of large catastrophe losses and improved profitability in other parts of the market, Fitch Ratings says.
Prices for property and casualty reinsurance likely peaked in 2023, with slower growth observed in January 2024 policy renewals, compared to the previous year. The companies maintained favourable terms and remained selective in underwriting, resulting in moderate premium growth.
The four large European reinsurers benefited in 2023 from their superior diversification. This was evident as all four achieved improved performance in both P&C and life operations.
They also reported strong profits in specialty and commercial lines, with Munich Re receiving additional earnings from its primary insurance business.
Reinsurers achieved stronger investment yields due to higher interest rates and favourable financial market conditions, contributing to their increased earnings.
Although they paid dividends and, in some cases, bought back shares, Moodey’s emphasises that their risk profiles are largely unchanged, reflecting the group’s stable appetite for underwriting and investment risk.
Most of the four reinsurers have committed to progressive dividend policies, which limit their flexibility to reduce shareholder payouts.
by Yana Keller
