Fitch: European reinsurers confirm resilience to catastrophes

European reinsurers' 2017 results support Fitch Ratings' view of the sector's resilience to catastrophe losses, the agency said in its recent "European Reinsurers Resilient to Catastrophe Losses" report.

With capital typically above companies' target levels, Fitch doesn't expect material premium rate rises this year, despite some increases in the January and April renewals.

The sector's resilience reflects the benefit of business diversification, as profits from life and health business, and solid investment returns tended to more than offset underwriting losses on property and casualty business from last year's large catastrophe claims. The four main European reinsurers - HANNOVER Re, MUNICH Re, SCOR and Swiss Re - all posted profits in 2017, despite significant catastrophe losses, and reported end-2017 capital at or above their stated optimal ranges.

SCOR maintained its share buy-back plan, while MUNICH Re and Swiss Re announced increases to theirs of up to EUR 1 billion and CHF 1 billion, respectively, and HANNOVER Re maintained its special dividend payments. All four said they would still have capital available to invest in growth opportunities or for further returns to shareholders. The continued abundance of capital in the sector, helped by capital influx from insurance-linked security investors, makes significant rate rises unlikely. Rates have been broadly stable this year, with rises limited and well short of offsetting the declines of the past four years.

Large conglomerates continue to show interest in the reinsurance sector in Europe and globally. Japanese telecoms company SoftBank is in talks with Swiss Re over acquiring a stake of up to 10% and there could be more deals involving Bermudan reinsurers, following recently announced deals between AIG and Validus, and AXA and XL Group.

Fitch's outlook for the global reinsurance sector remains negative, reflecting continued pressure on earnings from competitive pricing, alternative capital and low investment yields. Combined ratios, normalized for an average level of reserve releases and catastrophe losses, have steadily deteriorated.

The report "European Reinsurers Resilient to Catastrophe Losses" is available at www.fitchratings.com.

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

Share |

Related articles

20 years with XPRIMM

Our journey alongside the CEE, SEE and CIS insurance markets has reached the 20th milestone.
In 20 years we made every effort to become a reliable source of information, a familiar presence wherever something important happens in the re/insurance world.

2018-07-10

Deutsche Ruck grows and strengthens its assets

The Deutsche Ruck Group's gross premium income rose by 2.3% to EUR 1.2 billion in 2017. As well as a slight improvement in the operating result before tax, the Group once again achieved good investment income.

2018-07-11

LIVE: IIS Global Insurance Forum 2018 / Day2

The works of the Global Insurance Forum continued today in Berlin, Germany. Providing security for ageing populations in health care and pensions terms, as well as innovation and InsurTech or innovative strategies for the future development of the industry are on the today's agenda.

2018-07-10

ON THE MOVE

TOP EVENT

LIVE: IIS Global Insurance Forum 2018 / Day2

The works of the Global Insurance Forum continued today in Berlin, Germany. Providing security for ageing populations in health care and pensions terms, as well as innovation and InsurTech or innovative strategies for the future development of the industry are on the today's agenda.

10.07.2018

See all