Analysts at Moody’s Investors Service report that the four largest European reinsurers—Munich Re, Swiss Re, Hannover Re, and SCOR — achieved a combined earning of €10.2 billion in 2023, more than double their earnings in 2022, attributed to higher prices and improved investment returns.
Moody’s report underscores that all four companies exhibited robust underwriting results. Despite a high number of natural disasters in 2023, the companies managed to reduce their exposure by setting higher coverage limits.
They also benefited from recent substantial price increases. Furthermore, they strengthened their claims reserves to enhance financial stability in case of unexpected losses.
Analysts project that prices for property and casualty (P&C) reinsurance likely peaked in 2023, with slower growth observed in January 2024 policy renewals, compared to the previous year. Nonetheless, the companies maintained favourable terms and remained selective in underwriting, resulting in moderate premium growth.
Moody’s asserts, “The four large European reinsurers benefited in 2023 from their superior diversification.” This was evident as all four achieved improved performance in both P&C and life operations. They also reported strong profits in specialty and commercial lines, with Munich Re receiving additional earnings from its primary insurance business.
The ratings agency believes that the companies achieved stronger investment yields due to higher interest rates and favourable financial market conditions, contributing to their increased earnings.
Furthermore, the companies boast strong capital reserves, supported by solid regulatory solvency ratios. Although they paid dividends and, in some cases, bought back shares, Moodey’s emphasises that their “risk profiles are largely unchanged, reflecting the group’s stable appetite for underwriting and investment risk.”
Most of the four reinsurers have committed to progressive dividend policies, which limit their flexibility to reduce shareholder payouts.
Overall, Moody’s highlights that Swiss Re, Hannover Re, SCOR, and Munich Re all reported strong results for 2023.
