Record earnings for ‘big four’ Continental reinsurers; discipline held amid casualty, wildfire claims

The four largest European reinsurers – Munich Re, Swiss Re, Hannover Re and SCOR – posted record combined earnings of €11 billion for 2024, according to a report published by Moody’s Ratings.

The figure marks an 8% rise on 2023, driven by strong property and casualty (P&C) underwriting and improved investment returns, despite a surge in catastrophe losses.

All four companies reported robust P&C reinsurance underwriting results, with a reported combined ratio of 86.3% on average, improved by around one percentage point year on year.

The big four Continental European reinsurance firms are now forecasting further growth in 2025.

Moody’s said the outlook remains “favourable”, even after heavy losses from January’s Los Angeles wildfires, which have already absorbed nearly 40% of the reinsurers’ annual catastrophe budget.

“We expect them to deliver revenue and earnings growth in 2025, assuming no additional major catastrophes,” said the report. “Three of the four groups have raised their combined annual net income target by 20%.”

Solid underwriting amid volatility

The reinsurers recorded robust underwriting results in 2024 despite several headwinds. The average combined ratio across the group – the percentage of premiums used for claims and costs – improved to 86.3%, falling by one percentage point year-on-year.

“Reinsurers absorbed a lower share of catastrophe losses, reflecting higher deductibles and a greater contribution to total losses from secondary perils,” said Moody’s. Total insured losses from natural catastrophes topped $100bn for the fourth consecutive year, driven by hurricanes Milton and Helene.

Performance across the group varied. Munich Re and Hannover Re exceeded expectations with year-on-year net income increases of 23% and 28%, respectively. Swiss Re’s profits were flat, while SCOR’s fell sharply to just €4m, compared with €800m in 2023.

SCOR’s results were weighed down by a €348m loss from its life and health segment, driven by assumption changes in its long-term care book in Israel and adverse experience in Canada and South Korea. However, the firm estimated that without these changes, its 2024 net income would have reached €728m.

“We believe these to be one-off changes which have strengthened the companies’ reserves,” Moody’s wrote. It added that these adjustments have made L&H reserves more conservative, “reducing the scope for future negative surprises.”

Wildfires test catastrophe budgets

LA wildfire insurance claims are estimated at $30-$50bn, akin to a large hurricane.

According to Moody’s, this has consumed approximately 39% of the reinsurers’ annual catastrophe budget – deemed a significant early hit, given that hurricane season has yet to begin.

Despite this, Hannover Re, Munich Re and Swiss Re have all increased their full-year 2025 net income guidance by around 20%. Moody’s attributed the confidence to strong fundamentals across the board, including rising contractual service margins, steady premium growth and higher yields on investments.

Pricing eases, but discipline holds

While reinsurance prices softened slightly at the January 2025 renewals, all four firms maintained a disciplined approach to underwriting. “Terms and conditions remained tight,” said Moody’s, “and reinsurers will resist writing underpriced business throughout 2025 and beyond.”

SCOR reported a marginal 0.1% increase in pricing but saw declines for non-proportional coverage – the first since 2017. Swiss Re achieved a 2.8% average price increase, though this was below the 4.2% rise in expected losses. Munich Re, meanwhile, declined business that did not meet internal return hurdles.

“Risk exposure growth has slowed,” Moody’s noted. Swiss Re reported a 2% increase in natural catastrophe premium volumes at the January renewals, down sharply from 12% a year earlier. Appetite for US casualty risk has also diminished across the group amid concerns over litigation-driven claims inflation.

On capital, all four firms maintained strong solvency positions. Munich Re’s Solvency II ratio climbed to 287%, helped by foreign exchange gains and profitable new business.

Hannover Re’s dipped slightly due to growth-driven capital requirements, while SCOR’s remained stable, bolstered by capital solutions. Swiss Re’s solvency ratio under the Swiss Solvency Test fell by 12 percentage points but remained above target.

“Most of the reinsurers have increased their ordinary dividends, but have retained healthy surplus capital, leaving a buffer to help absorb potential large catastrophe claims,” the report added.