Preliminary 2025 data show growth and stronger results across Germany’s property and casualty and life insurance sectors, yet underwriting momentum is expected to cool in 2026, according to Moody’s Ratings.
Figures from Gesamtverband der Deutschen Versicherungswirtschaft indicate a clear rebound in P&C underwriting performance and solid expansion in life premiums.
On the back of those trends, Moody’s maintained stable outlooks for both segments.
In P&C, the gross combined ratio improved to 91% in 2025 from 96% in 2024. Higher pricing offset ongoing claims inflation, while natural catastrophe losses came in below average at €2.6 bn, down from €5.5 bn a year earlier.
Fitch Ratings expects consolidation in the German life insurance sector to pick up speed in 2026, driven by closed-book acquisitions.
The life insurance market for consolidators is maturing, in Fitch’s view, and more than EUR100bn of life liabilities now sit in closed books that could come to market.
The motivation to offload legacy portfolios is straightforward. Administrative costs keep climbing, IT migration included, while policy counts shrink.
Selling closed books lets German life insurers redirect attention to new business and, just as important, release capital that would otherwise stay tied up.
For run-off specialists, scale changes the economics. Acquiring closed books supports volume growth and underpins already strong financial results. These transactions don’t move quietly, though.
According to Beinsure, the combination of rate adequacy and lighter cat activity created a temporary earnings tailwind.
Moody’s expects that backdrop to shift. Assuming natural catastrophe claims revert to more typical levels and claims inflation moderates rather than accelerates, underwriting profitability is likely to ease in 2026.
Margin compression would reflect normalization rather than structural weakness. The life segment posted strong premium growth, largely driven by a surge in single-premium business.
Moody’s shifted Germany’s P&C insurance market outlook to stable, ending the negative view it carried before. The agency ties this move to stronger underwriting margins, steadier market dynamics, and pricing that’s finally catching up with loss trends.
Premium hikes tell most of the story. Motor insurance, hammered by claims inflation between 2022 and 2024, had seen years of underwriting losses.
The life insurance sector gets a stable call too, though for different reasons. Longer-term yields help life insurers keep guarantees on savings products.
Interest rates and the shape of the yield curve remain supportive for German life insurers, improving investment returns and increasing the appeal of savings-oriented policies compared with bank deposits.
Policy developments add another variable. Legislators are preparing a replacement for the underperforming Riester pension product, with a launch expected in 2027.
The reform could support private retirement savings and generate new inflows for life insurers.
Yet product design constraints remain under discussion. Mandated features and strict fee caps may limit pricing flexibility and product structure.
Moody’s flagged that these restrictions could shift competitive advantage toward asset managers, whose investment products and distribution models differ from traditional life contracts.
Germany’s insurance sector enters 2026 from a position of strength. Profitability improved. Premiums expanded.
Still, earnings sensitivity to catastrophe volatility, inflation dynamics, and regulatory design will shape the next phase of performance.
