Europe’s big four reinsurers could see €2bn+ of surplus earnings from benign loss activity

With loss activity in 2025 proving “exceptionally benign” since the LA wildfire losses in Q1, Autonomous has suggested the big four European reinsurers (Munich Re, Swiss Re, Hannover Re, and SCOR) could see a collective benefit of almost €2 billion in future results.

“This year, we have seen the extremes of cat activity. In Q1, the industry experienced exceptionally high catastrophe losses, weighed by the $40 billion+ LA fire hit in January, one of the largest insured loss events in history,” Autonomous said in a new report.

The firm continued, “However, since this enormous event, the industry has benefited from a stretch of benign activity.

“So far, the Atlantic hurricane season has avoided a US land-falling hurricane.”

Highlighting the reinsurers’ sensitivity to another benign natural catastrophe quarter, Autonomous estimated surplus earnings of €0.5–0.6 billion each for Hannover Re, Munich Re and Swiss Re, and a €120 million benefit for SCOR.

Collectively, that equates to almost €2 billion in pre-tax gains from the quiet quarter, the analyst added.

Autonomous went on, “Bringing together this assumption and combining with the H1 actual experience, and further assuming Q4 cat/major losses fall in line with ‘normal’ expectations, would suggest the reinsurers could be on course to deliver a cat result some €2.5 billion better than normal expectation.

“In such a scenario, we calculate Munich Re would be €1.0 billion below budget, Swiss Re ~$950 million, Hannover Re €0.5 billion and SCOR €0.2 billion.

“Other things being equal, this cat surplus versus budget averages 4.2% of combined ratio (unweighted), and more significantly, 20-40% of P&C Reinsurance divisional pre-tax earnings, and would represent approximately 15% of Group PBT across the group (ranging from 12.9% for Munich Re to 16.6% for SCOR).”

In the report, Autonomous additionally noted that, as in 2024, this year has seen significant balance sheet strengthening and buffer building ahead of the soft market onset.

The analyst highlighted that capital and capacity growth remain concentrated in traditional retained earnings and alternative markets, stressing that incumbents must take a proactive approach to managing capital and maintaining supply-demand equilibrium.

At a minimum, the quarter appears to support rising capital returns across the sector, with Autonomous now forecasting more than €10 billion of dividends and capital returns for 2025, up 25% year on year.