Europe’s Big 4 reinsurers can trace massive 9M ROE gain to T&C reset

The 2023 property reinsurance reset did its job, putting Europe’s big four reinsurers above the fray of mid-sized cat events and driving the group to a jaw-dropping 18 percentage point gain in return on equity, the  Fitch ratings agency said in a summary of 9M results for the European Big Four.

“All four reinsurers reported natural catastrophe claims below budgets for 9M23 thanks to better terms and conditions in renewed treaties, which cut the exposure to medium-sized natural catastrophe claims,” Fitch said of the group of Hannover Re, Munich Re, Swiss Re and SCOR.

Munich Re was called out for the highest underwriting margins amongst peers “despite slightly higher attritional losses than last year.”

SCOR and Swiss Re took the most improved awards, each snapping back from technical losses in the year prior period.

Higher prices in P&C reinsurance drove reported revenues 6% higher on average in 9M23. Munich Re and SCOR led in P&C revenue growth, both above the 6% mark in constant FX, the Fitch dataset showed.

Revenue growth was, however, “capped” below price gain by a notable shift towards excess of loss treaties at the expense of quota-share deals, Fitch analysts noted.

Rising margins in property allowed the four to bolster reserves in casualty lines, where the industry now frets over the impact of inflation and a post-Covid rebound in court verdicts.

The 18 point increase in return on equity for the European group of four pushed the segment ROE to a long-unseen 21%.

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