Among Europe’s Big Four reinsurers—Swiss Re, Munich Re, Hannover Re and SCOR—life and health (L&H) reinsurance earnings remained consistent in H1’25, supported by steady releases of contractual service margin (CSM) and risk adjustment, according to Fitch Ratings.
In its recent report, the ratings agency noted that the Big Four’s L&H reinsurance results were generally strong and that financial performance was more consistent in H1’25 than in H1’24, with experience variance positive for most and adding little volatility.
SCOR’s L&H insurance service result and life reinsurance gross margins rose sharply, following the one-off hit from updated reserving assumptions in H1’24. However, its margins remain below peers, as remedial actions to restore L&H profitability take time.
Munich Re posted a modest decline in its L&H insurance service result and technical margin, driven by several individual large losses (notably the deaths of high-net-worth individuals). Hannover Re was also affected, though Fitch said this was within normal volatility and not indicative of a worsening mortality trend.
Hannover Re’s strong earnings allowed it to take a more cautious stance in the critical illness morbidity portfolio in Greater China, leading to an increased risk adjustment.
Swiss Re’s L&H earnings fell year over year due to a reduced CSM release following an assumption review at end-2024. Experience variance remained negative, reflecting updated assumptions for smaller EMEA portfolios, as the major assumption updates for the main US mortality book were completed in H2’24.
Fitch said, “CSM stock increased marginally at Munich Re and Swiss Re in 1H25, indicating likely profitability growth in the L&H reinsurance book. It fell slightly at Hannover Re and SCOR.”
New business CSM contribution significantly exceeded the CSM release at Munich Re and, to a lesser extent, at SCOR, supporting underlying profitability growth.
Adverse FX effects weighed on CSM growth for all reinsurers except Swiss Re, which reports in US dollars and benefitted from currency strength. Swiss Re’s new business CSM rose to $569 million in H1’25 from $562 million in H1’24, while the CSM balance increased by $410 million since end-2024, reaching $17.8 billion—mostly due to the weaker US dollar.
For Hannover Re, net new business CSM increased 17% year over year to €216.6 million, while the net loss component rose to €16.3 million from €9.9 million.
New business CSM was driven by several large transactions in longevity and financial risk—particularly for Munich Re in the US—alongside traditional mortality business for Hannover Re and Swiss Re, Fitch reported.
Fitch added, “L&H profitability tends to be more stable and more predictable under IFRS 17 than under IFRS 4 due to the regular release of both CSM and risk adjustment. However, CSM movements and profitability remain dependent on the adequacy of previous reserving assumptions for long-tail lines and are typically reviewed at the end of the year.”
Within the report, Fitch also said that P&C reinsurance reached peak profitability, with a record low average combined ratio of 81.5% for Europe’s Big Four reinsurers.
