Property and casualty reinsurance profitability looks to have topped out. Moody’s Ratings said competition is picking up across all business lines, which is starting to squeeze the sector’s margin story.
In 2025, the combined ratio of four large European reinsurers (Hannover Re, Munich Re, SCOR, and Swiss Re) improved on the back of lower natural catastrophe claims.
Investment income also kept rising, which supported earnings through the year.
The tone shifted at the January 2026 renewals. Moody’s said these reinsurers posted lower risk-adjusted pricing across most segments, including specialty insurance, a segment long seen as a useful source of diversification.
Moody’s expects this pricing move to weaken underwriting ratios by roughly two to four percentage points in 2026.
Life reinsurance will still carry a meaningful share of earnings. Across the four groups, the life contractual service margin fell 4% on average, partly due to adverse currency moves.
Moody’s reads this as a mild easing in future life reinsurance profits.
Some life portfolios are still under strain. Even so, Moody’s said changes to reserving assumptions over the past two years should support reported results in the next reporting periods. So there’s a cushion, though not a huge one.
Reinsurers are also showing a bit more appetite for natural catastrophe risk. Some have cut back retrocession protection. Others have taken on more exposure directly. Moody’s sees this as a sign the segment still draws active interest.
European reinsurers are trimming exposure to US casualty risk, though the pace and shape of those moves differ by company.
Moody’s said solvency ratios remain strong despite those portfolio changes. The largest players have also kept strengthening balance sheets through higher reserves.
On geopolitics, Moody’s said current conflict in the Middle East should have limited direct impact on the major reinsurers.
Marine insurance carries the main area of exposure. Even there, expected losses should stay manageable because these groups remain highly diversified.
Moody’s view is pretty clear. P&C profitability is still strong, though pricing pressure and selective risk positioning are set to slow momentum, even as balance sheets keep getting stronger.
