Four Major European Reinsurers Saw Earnings Improve in 2021

The four major European reinsurers—Hannover Rueck SE, Munich Reinsurance Company, SCOR SE, and Swiss Reinsurance Company—improved their earnings significantly in 2021 due to improved pricing and lower property and casualty COVID-19-related claims, according to a new report from Fitch Ratings.

The strong earnings increase allows the reinsurers to overcompensate for increases in excess mortality losses as a result of COVID-19, above-average natural catastrophe claims, and lower investment income, Fitch said. The capital positions of the reinsurers improved in 2021 such that three of the four have decided to significantly increase capital returns to shareholders, the rating agency reported.

Fitch said that the reinsurance price increases across large parts of business up for renewal in January 2022 were down from their 2021 level for all 4 major European reinsurers. US casualty saw increased price pressure as more capital was allocated to the line of business, the rating agency said, a trend that Fitch said is likely to spread to other lines of business this year and in 2023.

In its report, European Reinsurers' Earnings Much Improved in 2021, Fitch said it believes the tailwinds from the hardening market remain strong enough for the reinsurers to offset growing risks from economic inflation and heightened volatility in financial markets. The rating agency also expects reinsurers' earnings to benefit from a decline in excess mortality claims due to the absence of significant COVID-19 variants in 2022.