European (re)insurers 'well positioned to weather tariff storm': S&P

By Aidan Gregory

April 9 - (The Insurer) - The European (re)insurance sector is "well positioned to weather the storm" unleashed by U.S. President Donald Trump’s trade tariffs but could be challenged if there is a prolonged volatility in capital markets, S&P's Volker Kudszus told The Insurer on Wednesday.

Kudszus, managing director and sector lead for insurance ratings at S&P in Frankfurt, said that the European industry was not immune to tariff implications, but said any impacts would "depend on how long this whole thing lasts.”

On Wednesday, the S&P 500 closed 9.5% higher after Trump announced a 90-day pause to the imposition of the tariffs for most U.S. trading partners apart from China, the world's second-largest economy, which had its tariffs increased to 125%. The VIX fell from around 50 to 35 over the course of the trading day.

A sustained downturn in capital markets will also negatively affect the investment income of the sector, particularly life insurers, who need to stay invested in fixed income to match their long term liabilities.

“The most direct or the most pronounced impact might come from investment markets,” said Kudszus.

According to S&P, the European (re)insurance’s sector’s capital surplus is expected to exceed 100 billion euros over the 2025-26 period. Most of Europe’s listed insurers have a solvency ratio of 200% or more, particularly the reinsurers, which have accumulated sizable capital buffers in recent years.

This remains a “key strength” for the industry, according to Kudszus.

Over time, the tariffs are also likely to push up costs, with goods such as car parts becoming expensive to replace, which will have a negative impact on the profits and losses of European (re)insurers, particularly for primary carriers.

“We see lower market risk with the reinsurers,” added Kudszus. “If you have inflation and, with inflation, higher claims costs because, let's say, car parts get more expensive, then other claims will get more expensive. So, everyone will see that.”