There was a strong year-on-year decline in profitability in 1H22 for the four main European reinsurers, reports Fitch

There was a strong year-on-year decline in profitability in 1H22 for the four main European reinsurers, according to Fitch Ratings.

This followed significant write-downs on investments and booked claims reserves for the war in Ukraine among the peer group – Munich Reinsurance Company (Insurer Financial Strength (IFS): AA/Stable), Swiss Reinsurance Company Ltd (IFS: A+/Stable), Hannover Rueck SE (IFS: AA-/Stable) and SCOR SE (IFS: AA-/Negative).

Underwriting margins declined on average by 3.5pp as natural catastrophes, the war in Ukraine and the drought in Brazil caused claims to rise in 1H22 compared with the same period a year before. Investment income dropped on write-downs on bonds from Russia and Ukraine as well as listed equities.

However, higher interest rates helped to support current investment yields, which started to rise year-on-year in 1H22, and pushed solvency ratios higher on lower capital requirements for interest rate risk.

Price increases gained in momentum in the June and July 2022 renewals in particular for property catastrophe covers as reinsurance capacity was constrained and reallocated to casualty lines. High inflation also pushed up premium rates.

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