Reinsurers’ profits jump in H1: Moody’s

Improving market conditions bolstered underwriting profitability in the first half of 2021, according to  Moody’s Investors Service report.

Reinsurers’ profits climbed during the period, with Europe’s four largest reinsurers reporting aggregate net profit of €3.6 billion, up from €0.2 billion a year earlier.

According to Moody’s Investor Service, the results for the first half of the year were driven by stronger underwriting performance in property and casualty reinsurance and stable investment returns.

All four reinsurers, which includes Munich Reinsurance Company, Swiss Reinsurance Company Ltd., Hannover Rück, and SCOR, also had improved solvency, approaching, or exceeding the upper end of their target ranges.

The report also highlighted a fall in claims relating to Covid-19, but said that results, particularly within life reinsurance, are still being affected.

Moody’s Investor Services warned that a “high incidence of natural catastrophes” over the rest of 2021 have the potential to negatively impact reported combined ratios.

“The significant jump in profits is not due only to the comparison with depressed results last year when reinsurers were hit by both financial market turmoil and the first wave of COVID-19 claims, but also improving market conditions that have led to better underlying underwriting profitability,” said Christian Badorff, a vice President and senior analyst at Moody’s and the author of the report.

“However, claims related to heavy flooding in Europe and China, civil unrest in South Africa, and the risk of an active hurricane season, will likely put some pressure on the four large reinsurers' operating performance in the second half.”

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