European reinsurers report record 21.1% return on equity in H1 2025: Fitch

By Ashish Tiwari

Aug 20 - (The Insurer) - The four largest European reinsurers reported a record average return on equity of 21.1% in the first half of 2025, according to Fitch Ratings, even though revenue growth lagged and the reinsurance cycle showed signs of turning.

The average ROE for Munich Re, Swiss Re, Hannover Re and Scor surpassed the previous peak of 20.5% seen in H1 2023, having increased sharply from 15.5% in the same period last year, largely owing to Scor’s earnings recovery.

Sustained underwriting results across most business lines and steady investment income supported profitability despite rising insured natural catastrophe losses and volatile markets, Fitch said on Tuesday.

“The very strong financial performance and reserve buffers underscore the resilience of the reinsurers … as well as their preparedness for likely less favourable market conditions in the next 12–24 months,” the rating agency said.

The average P&C reinsurance combined ratio hit a record low of 81.5%, an improvement of 1.3 percentage points from H1 2024, thanks to a healthy attritional performance and low natural catastrophe loss ratio despite wildfires in Los Angeles.

On Hannover Re's quarterly earning call, CEO Clemens Jungsthöfel said: “The market environment is characterised by an increase in reinsurance capital and a willingness to deploy this capital in an attractive market environment.”

And the resulting increase in competition has created some pressure on pricing, most pronounced in property cat, he said.

Munich Re reported the strongest P&C combined ratio among the peer group, while Hannover Re’s ratio worsened slightly due to increased prudence in reserving.

Life and health reinsurance also posted steady earnings, driven by contractual service margin releases and lower volatility. Investment income benefited from fixed-income reinvestment yields of 4.0% to 4.5%, which Fitch said would continue to push up recurring yields in the second half.

Mid-year renewal pricing continued to soften and volumes declined, leading to an average revenue fall of 2.7%, contrasting with 6.7% growth a year earlier.

During the second quarter, Munich Re attributed the volume decline to the deliberate reduction of business that did not meet “lofty” risk/return requirements.

Fitch said reinsurers prioritised profitability over growth amid reinsurance cycle challenges, reducing exposure in U.S. casualty lines.

Capitalisation remained strong with solvency ratios well above targets for Hannover Re (261%), Munich Re (287%), Scor (210%) and Swiss Re (264%) as of mid-2025.

Dividend payments increased for Munich Re, Hannover Re and Swiss Re, underlining confidence in their capital positions.