According to an AM Best report, these companies are maintaining their profit targets for 2025, despite the impact of the California wildfires in the first quarter and early signs of rate softening.
Life portfolios performed well for three of the four reinsurers in 2024, with reduced effects from pandemic-related deaths. Excess mortality in the US persisted, but SCOR was the only one of the group to report a large loss in its life segment for the year. Swiss Re transitioned to IFRS reporting in 2024, which now places all four companies under the same accounting standard.
Comparisons between groups reporting under IFRS 17 and those using US GAAP remain challenging due to differences in standards. Discounted combined ratios under IFRS 17 are not directly comparable to the undiscounted ratios reported under US GAAP or IFRS 4. Even among IFRS 17 reporters, differences in disclosures and measurement models complicate direct comparisons.
Despite these challenges, AM Best noted that the “Big Four” reinsurers reported average returns on equity (ROEs) for 2024 that were in line with the US and Bermuda market composite. Lloyd’s, however, posted a higher ROE of 21.2%. In 2023, the “Big Four” reported lower ROEs than both the US & Bermuda market and Lloyd’s.
The group’s ROEs tend to be more stable over time, partly due to the stabilizing effect of their diversified life portfolios. Unrealized gains and losses on fixed-income investments are reported through other comprehensive income for the “Big Four,” while US & Bermuda players and Lloyd’s report these through profit and loss, resulting in less variation in European ROEs.
The average combined ratio for the “Big Four” was 86.4%, similar to the US and Bermudian average of 89.5% and Lloyd’s at 86.9%. However, the “Big Four” ratios are discounted, while the others are not. Discounting typically accounts for an eight percentage point difference, though this varies by company and year depending on business mix. The risk adjustment required under IFRS 17 partially offsets the impact of discounting.
In the first half of 2025, the four largest European reinsurers achieved a record average return on equity (ROE) of 21.1%, surpassing previous highs. Combined earnings for 2024 reached €11 billion, an 8% increase from the prior year.
Munich Re and Hannover Re posted net income increases of 23% and 28%, respectively, while SCOR’s profits declined due to a €348 million loss in its life and health segment. The group’s property and casualty (P&C) reinsurance profitability remained robust, with a record low average combined ratio of 81.5% in the first half of 2025.
Revenue growth slowed compared to the previous year, with reinsurers prioritizing diversification and profitability over expansion. The depreciation of the US dollar negatively affected most reinsurers, exposing varying sensitivities to foreign-exchange movements.
In 2025, the “Big Four” reinsurers have continued to report strong non-life reinsurance results, despite significant losses from the California wildfires in the first quarter. Otherwise, the large loss environment has been relatively benign so far this year.
Disciplined underwriting, rate adequacy, and robust investment income have allowed the companies to maintain their full-year profit targets for 2025.
Moody’s Ratings noted that the January Los Angeles wildfires consumed about 39% of the reinsurers’ annual catastrophe budget, with insurance claims estimated between US$30 billion and US$50 billion.
Despite this, three of the four companies raised their annual net income targets by 20%. Moody’s maintains a favorable outlook for the sector, expecting continued growth in 2025 if no additional major catastrophes occur.
As market conditions begin to soften in 2025, the “Big Four” still show appetite for property catastrophe risk, following recent portfolio adjustments and increases in attachment points. While prices have softened in the 2025 renewals, discipline on terms and attachment points remains. The focus has shifted to capitalizing on favorable pricing while it lasts.
The group is also seeking growth in specialty segments such as cyber, marine, engineering, and other lines in both insurance and reinsurance. This strategy aims to enhance diversification and support more stable earnings.
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