After several years of outperformance, European reinsurers’ momentum has stalled, with analysts warning that sustaining top-line growth and margins will be increasingly challenging in 2026 amid a softening pricing cycle, according to a recent report by Autonomous.
Autonomous noted that all reinsurers underperformed the sector, though variance was high. Among Europe’s “Big Four” reinsurers, SCOR was the strongest performer, which appreciated by 23% in absolute terms, followed by Munich Re (+19%) and Hannover Re (+11%), while Swiss Re lagged, up just 3%.
The London Market showed even greater divergence in performance and sat at the bottom of the sub sector performance chart.
Autonomous added that investor concerns around pricing in the P&C reinsurance market intensified through 2025, as excess capacity built up following a period of exceptional profitability, compounded by continued inflows of alternative capital. Exposure to the most volatile classes varied significantly by company.
Analysts noted that the January 2026 renewal season is in full swing, with the market braced for mid-teens pricing declines in some of the headline grabbing lines of business, with these largely focused around property cat.
Looking ahead, Autonomous expects reinsurers to be buffeted by the crosswinds of a softening pricing cycle, much like in 2025. While analysts believe reinsurers have strengthened their balance sheets, earnings growth has likely peaked, with diversification and capital flexibility becoming core growth differentiators—factors that underpin Autonomous’s preference for Munich Re (OP). The firm downgraded Swiss Re to UP from OP.
Analysts stated, “We expect low, but still positive top line growth, however the pace of earnings growth we think poses a greater challenge to the reinsurers, particularly in the context of robust growth for the market and broader sector.
“For reinsurers, the cycle is softening, if from exceptionally peaks, and that backdrop naturally pivots the narrative from ROE expansion to maintenance, or even defence. Pricing appears to have plenty of embedded margin despite clear and continued softening, and we expect ROEs to remain solid through 2026 and 2027, averaging 17.8% for the reinsurers, and 15.1% for the London Market stocks. Alternatively, our estimated ROE for 2027 is just 1.6ppts and 1.1ppts lower than 2025 for the reinsurers and London Market stocks respectively.”
Autonomous analysts summarised: “Much like 2025, we think the reinsurers are likely to be buffeted by several factors. Through 2025, the soft cycle narrative, which was already in its infancy at the start of the year was further fuelled by substantial build of excess capital and capacity. Without a significant capital depletion event we think this direction of travel of the cycle will continue unabated — recall the misplaced hopes of some stabilisation of the cycle in the wake of the California fires.
“Typically, we forecast “normal” cat experience into our future modelling assumptions. With pressure on the cycle building, this further feeds through into greater challenges for the companies to pursue top line growth ambitions, while also maintaining margins — particularly against a comparative year, such as 2025, that has ultimately been favourable from a large loss perspective. As we have described above, we expect net income growth to moderate, typically into the low single-digit percentage range at best, with few outliers.”
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