Investors sell off large European reinsurers following Q1 P&C revenue decline

The share prices of Europe's three largest reinsurers fell into negative territory after the companies reported lower first-quarter revenues in early May.

Hannover Re's share price recorded the steepest decline, dropping 10.56% on June 9 from its level at the beginning of May. It was closely followed by Munich Re, which fell 10.31% over the same period. Swiss Re's share price declined by a more modest 5.38%. Scor, however, bucked this downward trend with a 1.89% increase over the period, despite also reporting lower first-quarter revenue. Scor outperformed the Stoxx Europe 600 Insurance index, which fell 1.28% during the same period.

All four reinsurers reported lower group revenue year over year in the first quarter of 2026. With the exception of Scor, this was largely driven by declines in property and casualty (P&C) reinsurance revenue. Scor's revenue decline was mainly due to its life and health business, with much of the decrease caused by foreign exchange effects.

While some of the reduction in P&C revenue at the big four reinsurers was caused by foreign exchange effects, it was also triggered by reinsurers cutting back as prices in P&C reinsurance continue to fall.

Below expectations

The extent of the drops in P&C reinsurance revenue surprised analysts. Munich Re had the biggest gap between expectations and outcomes. Its reported first-quarter P&C reinsurance revenue of €3.92 billion was 14.7% below analysts' estimates of €4.60 billion, according to Visible Alpha consensus. Hannover Re also had a large gap, with actual revenue 13.9% below analysts' expectations. Swiss Re's P&C reinsurance revenue was 7.9% below projections.

Munich Re previously said it expected its P&C reinsurance business to grow more slowly and make up a smaller proportion of group profits over the next five years as a result of softening prices.

Scor once again stood out as an exception. Although its first-quarter P&C reinsurance revenue declined 2.5% year over year, it still beat analysts' expectations by 1.2%.

Some analysts lowered their price targets for three of the big four reinsurers in May. Munich Re's consensus target price fell to €551.19 at the end of the month from €582.38 at the beginning, according to S&P Capital IQ consensus. Swiss Re's price target fell to CHF161.52 from CHF164.67, and Hannover Re's fell to €285.87 from €289.67. Scor's price target, meanwhile, increased to €33.92 from €33.27.

Profit surprise

The big four reinsurers' P&C reinsurance underwriting profitability, however, exceeded expectations. All four reinsurers reported improved combined ratios, which measure P&C underwriting profit, as analysts had forecast. This was largely because their first-quarter 2025 numbers were affected by losses from the Los Angeles wildfires in January that year, and natural catastrophe load was relatively light in the corresponding quarter of 2026. All four reinsurers' P&C reinsurance combined ratios beat analysts' forecasts in the first quarter.

Overall net income applicable to common stockholders also improved across the board and exceeded analysts' estimates for three of the four reinsurers. Only Hannover Re's net income of €710.6 million was below the analysts' consensus of €731.3 million.

The Middle East war had little effect on reinsurers' first-quarter results, even though they started setting aside reserves for eventual claims from the conflict. The largest of these reserving actions was Swiss Re's $400 million — $350 million for P&C reinsurance and $50 million for Swiss Re Corporate Solutions — which the company said was to cover potential claims inflation stemming from the war. Munich Re established a €90 million reserve, of which €60 million was for its Global Specialty Insurance division, and Scor set aside a mid-double-digit million-euro reserve for the war. Hannover Re said that any war-related claims from the first quarter would be covered by its unused large loss budget for the quarter. All the reinsurers said they had received a few claims notifications related to the war so far.

Although reinsurers' profits beat expectations in the first quarter, analysts now expect lower profits at some of the big four than they were at the start of May, before earnings were released. As of June 4, analysts expected Munich Re to make a profit of €6.30 billion in 2026, down 1.1% from their forecasts as of May 1, and €6.33 billion in 2027, down 3.3%, according to Visible Alpha. Analysts' estimates for Hannover Re's 2026 and 2027 profits are also down marginally from May 1. For Swiss Re and Scor, however, analysts are more optimistic about their 2026 earnings than they were at the beginning of May, but more pessimistic about 2027.

The softening of reinsurance prices has not abated since the close of the first quarter. Prices for property-catastrophe excess-of-loss reinsurance in Japan fell 16% at the April 1 renewals, reinsurance broker Howden Re said in a report. In response to price decreases, most of the big four reinsurers have been cutting back. Munich Re reduced business volumes by 18.5% at the April 1 renewals, Swiss Re cut its business by 8.1%, and Scor cut its business by 8.7%. Hannover Re was the outlier, increasing its premiums by 18.8% between Jan. 2 and April 1. Prices have fallen further since Howden Re said property-catastrophe rates were down by up to 25% at the June 1 renewals.

Visible Alpha is a part of S&P Global Market Intelligence.