A new commentary on global property and casualty (P&C) reinsurers from Morningstar DBRS notes that despite elevated insured global natural catastrophe losses, global P&C insurers reported strong net earnings in 2024.
Entitled Global P&C Reinsurers: Solid Earnings in 2024 but There Are Potential Headwinds on the Horizon for 2025, the report indicates that the firm is now revising its outlook on the P&C reinsurance segment from positive to stable.
Studying nine reinsurers for its analysis, Morningstar DBRS says the P&C reinsurers enjoyed steady top line growth in 2024 and strong combined ratios in their reinsurance businesses, despite a very active hurricane season during the year.
“The aggregate combined ratio for the selection of companies improved to 86.8 per cent for 2024, compared with 88.1 for 2023. Drivers of the resilient underwriting performance included favourable pricing, improved terms and conditions and a deliberate reduction in appetite for business segments that did not meet risk-return thresholds,” they write.
While global insured natural catastrophe losses were estimated by Gallagher Re to be about $154-billion in 2024, they add that reinsurers have increased rates and introduced tighter terms and conditions. “Primary insurers have responded by buying reinsurance at higher attachment points,” which has helped preserve the reinsurers’ underwriting profitability, they write.
Los Angeles wildfires
The report discusses the Los Angeles wildfires in January 2025, saying that even as reinsurers pay out billions in claims, their net profits for 2025 are expected to rise: Munich Re, the largest reinsurer, estimates that it will pay out $1.3-billion in claims. “Even with this large insured loss event, Munich Re is still projecting that its net profit for 2025 will rise to six billion euros from 5.7-billion EUR in 2024, while Swiss Re, the second largest global reinsurer expects net income to be about $4.4-billion for 2025, and increase from $3.2-billion in 2024,” the report states. (Figures in U.S. dollars unless otherwise indicated.)
Collectively, the reinsurers reported $26.7-billion in total investment income for the full year of 2024, a 15.1 per cent increase from $23.2-billion in 2023.
As for its rating revision for the sector, Morningstar DBRS says this was done in light of increasing tariffs complicating insurers’ operating environment. (Unlike personal lines insurers, they say global reinsurers have been somewhat insulated from the inflationary effects of U.S. tariffs, so far.) “We expect the P&C reinsurance sector to be able to navigate the difficult operating environment even if market volatility is sustained.”
