All four major European reinsurers reported a strong improvement in earnings for the nine months, compared to the same period last year, according to a report from Fitch Ratings.

Sharply lower non-life, coronavirus-related claims, strong premium growth and resilient investment income more than offset the high, above-budget natural catastrophe losses experienced during the third quarter, said Fitch in the report European Reinsurance Dashboard: 9M21 Results

On average, the big four reinsurers – Munich Reinsurance Co., Swiss Reinsurance Co., Hannover Re and SCOR SE – showed double-digit premium growth in property/casualty reinsurance in 9M21 on the back of rising prices, rising demand and an increased risk appetite, added the ratings agency. (See related chart).

Reinsurers’ growth ambitions have been backed so far in 2021 by very strong capital adequacy, which was partially achieved by the issuance of subordinated debt, the report said.

Swiss Re was the only reinsurer of the big four to show less than double-digit premium growth because it cut back on property aggregate exposures and provided less secondary peril catastrophe covers, Fitch continued.

Natural Catastrophe and COVID-19 Mortality Claims

“All four major European reinsurers reported natural catastrophe claims above their budgets in 9M21 as 3Q21, in particular, was hit by severe flooding in central Europe and hurricane Ida in the U.S.,” said Fitch. “The increase in severity and frequency of nat cat claims driven by climate change will likely force reinsurers to enlarge their nat cat budgets or reduce their risk exposure. Normalizing for large losses, all four reinsurers achieved very strong combined ratios of at least around 95%.” (See related chart).

Fitch noted that the pandemic had a strong impact on the life and health reinsurance activities of the major reinsurers, which had to put aside 7% of net earned premiums on average to cover excess mortality claims.

Source: Fitch Ratings