European property reinsurance market reaches peak profitability
Fitch Ratings said the four largest European property and liability (P&C) reinsurers posted record low average combined loss ratios of 81.5% in the first half of 2025. This performance was driven by solid underlyings, low catastrophe losses and favourable market conditions.
Reinsurers benefited from the continued impact of rate increases, stable contractual terms and large loss events that remained within or below expected budgets.
An additional factor was the new IFRS 17 reporting, which reduced combined ratios by around 9 points on average – almost double the amount in the first half of 2024.
Munich Re recorded the best combined ratio in the P&C segment among its peers, despite a slight deterioration. A diversified portfolio and the decision not to increase reserves in the first half of the year ensured a positive result due to the release of reserves, which allowed to keep the indicator below the annual target.
Hannover Re showed a loss ratio of 88.4%, which is slightly above the target level. The main reason was a more cautious provisioning policy, which exceeded the benefits from the release of reserves.
In addition, the results were affected by large losses from man-made events, which turned out to be higher than budget. Fitch notes that this step strengthens the company’s resilience, but reduces profitability in the short term.
Swiss Re and SCOR also used strong underwriting results to form additional reserves. According to Fitch, this strategy strengthens the adequacy of reserves in the long term.
At Swiss Re, the positive effects were partially offset by additional reserves, while at Hannover Re — completely.
Munich Re and Hannover Re already had significant buffers, having moved to a “best estimate plus margin” approach earlier than others.
Fitch concluded that the sector’s profitability is at its highest level in recent years. At the same time, different approaches to reserving lead to differences in short-term results for individual companies, but at the same time strengthen their financial resilience in the future.