AM Best has noted that life protection reinsurance, driven largely by the US market, has been a key element of the European Big Four reinsurers’ risk profiles, providing diversification and earnings stability, with typical margins of 5%–10%.
However, AM Best cautioned that life reinsurance is a long-tail business, and any significant shift in mortality trends could materially impact profitability.
“While the life portfolio continues to perform well, there have been cases of higher mortality experience on back books,” AM Best said.
The rating agency continued, “Generally, these adverse developments are offset by higher quality new business. Although post-COVID mortality trends were higher, there is an expectation that actual versus expected mortality will rebalance to historical norms.”
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Elsewhere, AM Best underlined the fact that several market-leading reinsurers have undertaken assumption reviews, leading to reductions in their Contractual Service Margins.
Readers may recall that, for the full year 2024, the French reinsurer SCOR’s net income, excluding the mark-to-market impact of the option on own shares, decreased by 98.6% to €11 million, as the contractual service margin fell 8.9% to €4.1 billion.
The decline in net income for the year reflected the impacts of the outcome of the 2024 L&H assumption review, accounting for €-700 million in insurance service result and €-900 million in contractual service margin.
These reviews were described as one-offs and necessary to align assumptions with updated experience. SCOR reported a rise in net income to €226 million in Q2 2025, reversing the loss of €308 million recorded in Q2 2024.
The broader life portfolios across major reinsurers have also remained profitable, which you can read more about here.
AM Best concluded, “With favourable interest rate conditions and rising demand for longevity and mortality coverage, life reinsurance continues to serve as a vital diversification mechanism, offering consistent returns even as volatility rises elsewhere.”
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