Reinsurers produced outstanding Q1 results

Global reinsurers on the whole delivered outstanding financial results in the first quarter of 2026. The first three months of the year were free from major catastrophic events, which helped almost all the larger reinsurance carriers to produce a double-digit improvement in their combined ratio. In contrast, for the first quarter of 2025 they were impacted by California wildfire losses in excess of $5 billion, yet in aggregate still produced a solid performance.

The same reinsurers almost all reported a decline in gross premium income for Q1, 2026. For some the income reduction was considerable and deliberate; the largest reinsurers shaved the most off their top lines; Munich Re, Hanover Re, and RenaissanceRe each cut their gross premium income by 10% or more. That’s almost certainly in excess of premium reductions granted on renewing business, which had fallen in Q1 by as much as 20%, according to some reports, but more generally were about 5%. (Subsequent price cuts at the 1 April and 1 June renewals were deeper, but that’s for a future quarter’s report.)

Premium decline was not evenly spread. When measured by percentage, those that shrank the most were among the largest. Munich Re cut its P&C top line by nearly a fifth, or 19.8%. RenaissanceRe cut 16.3%, Hannover Re 11.9%. All are in the top five by Q1 premium volume. Notably, these premium-cutting carriers are also those that retain the lion’s share of the risk they assume from cedants. They’re the big-balance-sheet, global reinsurers, and have the most to lose from underpriced reinsurance.

Largest Q1-reporting Gross Premium Reductions

The link between top-line trimming and retention is showed in the table. Swiss Re and Hannover Re did not at Q1 disclose sufficient data to calculate retentions, but have historically ceded relatively little. RenRe’s cession ratio includes premium ceded to consolidated entities such as Vermeer Re and Da Vinci Re, holding a portion of ceded risk within the group. It’s relevant to note, as well, that quarterly retention rates may not match annual rates, and are therefore an indicator only.

Reduced premium income was driven by different combinations and weightings of the same three key factors, depending on the company. These are:

• Lower rates on line
• Active portfolio management through non-renewal
• Reduced participation in lower-margin business

The first factor in effect beyond the control of individual reinsurers, since competitive pressures influence the direction of prevailing rates. The second two are within individual market’s control, and may serve to temper changes in market rates by restricting or increasing reinsurance supply, but even the largest reinsurers are unable to exercise control over market pricing. When supply is high, rates tend to fall until it reduces.

Today’s market retains an enormous amount of capacity to accept reinsurance risk, relative to demand. Against that backdrop, reinsurers appear to have put underwriting discipline ahead of income during Q1. That has been the norm in the early stages of historical examples of cyclical softening of reinsurance market conditions.

Only a handful of reporting reinsurers achieved topline growth. One of London’s listed carriers calculated that rates had declined 13%, declared them adequate, and increased their reinsurance top-line premium income by 7.1%. Another said rates had declined by 7% (the two have significantly different books of business), and in contrast shrunk their reinsurance GWP by 14.8%.

Whilst the profitability of the risk underlying those Q1 premiums remains to be seen, quarterly-reporting reinsurers were almost united in achieving a huge profitability increase in Q1 compared to the first three months of 2025. Fitch Ratings reported that the four largest European reinsurers achieved their highest-ever aggregate return on equity, at 21.4%. That was after delivering ROE of 17.5% in Q1, 2025. Whilst those numbers are very impressive, it’s worth remembering that these outcomes follow a soft-market period sustained until 2001. Then and for several years prior, reinsurers struggled, and often failed, even to cover their cost of capital.

In other words, the sector generated materially better underwriting margins while writing slightly less business overall.

One group of nineteen Q1, 2026-reporting reinsurers accounts for c$38.1 billion of gross premium income (or equivalent) for P&C reinsurance business during the period.* The weighted combined ratio of this group was 80.96%. That compares to 97.12% for the same carriers at the same point in 2025,  when they wrote $39.3 billion on the top line. The group saw income decline 6.1% in Q1, 2026, whilst the combined ratio improved 16.16 points.

RenaissanceRe alone contributed more than four points of improvement, since the catastrophe reinsurer fared much better in the recent quarter than it did in Q1, 2025, when it absorbed large losses from the California wildfires. Discounting RenRe, which is both one of the largest premium writers in the group (c$3.5 billion of Q1, 2026 income) and the company with the largest year-on-year combined ratio swing (more than 55 points), has a dramatic impact on the numbers. The weighted Q1, 2025 combined ratio of the remaining 18 markets was 93.5%, whereas in Q1, 2026 it is 81.8%. That’s still a 11.7 point difference, which reflects a massive increase in profitability.

Top ten Q1-reporting reinsurers by combined ratio improvement

Reports of reinsurance losses arising from the ongoing Middle East conflict have been patchy and vague, but so far the total falls well below $1 billion. With explicit reinsurance reserve additions for losses arising from the conflict of less than $250 million, including losses under specialty contracts, the short-term loss looks unlikely to be serious for most reinsurance carriers. None of the companies reporting said that they expect losses from the Middle East conflict to reverse pricing trends.

The largest figure disclosed related to the war is Swiss Re’s $400 million set-aside for “secondary risk”, including supply chain and higher energy-price inflation, rather than, it seems, for reinsurance recoveries. Munich Re reported a “cautious” reserve of €90 million for marine war and PVT-market claims, two thirds of which was for its global specialty book, with only €30 million for reinsurance. SCOR disclosed a “mid-double-digit” millions of euros of IBNR on a “precautionary” basis; Hannover Re booked no specific estimate.

Everest has set aside $58 million, or 1.6 points of claims ratio from its catastrophe budget. AXIS recorded about $16 million for war-related losses in Q1, Convex about $23 million, and Markel $35 million from under a variety of specialty, catastrophe, and secondary-perils headings. IGI said its Middle East loss at Q1 was $15m, including a $10.5 million energy claim arising from a vessel’s collision with an offshore platform (its GPS and navigation lights were disabled). RenaissanceRe described its exposure as “limited”; Arch expects  further man-made cat losses arising from Iran conflict.

If Q1 premium income was fairly consistently lower, profits on the same basis typically higher, and the impact of the Middle East war muted, reinsurers’ reserve movements for the Q1 reporting period were very much less consistent across the companies. Bermuda and US companies typically released reserves for short-tail property and other lines, whilst some European reinsurers used excess profits to practise precautionary reserving. SCOR, for example, announced an undisclosed addition to reserves in the mid-double-digits, which it described as “opportunistic buffer-building”. Hannover Re reported a “continued increase in reserve resiliency”.

RenaissanceRe released $162 million, primarily from its property-cat reserves, Arch Re released up to $152 million, Everest $33 million, and Berkshire Hathaway $260 million, to name only four companies that were able to remove money from their claims reserves and added to the bottom line. This helped to make a good year even better, because the reserve releases directly lowered loss ratios and boosted underwriting profits.

Another factor in the outperformance of reinsurers at Q1, 2026 was investment success. Even where underwriting improved only modestly for some reinsurers, earnings often improved significantly, because fixed-income portfolios of bond assets were earning materially more than during prior years. Reporting varies so dramatically from company to company that it’s not possible to report a meaningful group investment result, although it is clear that earned and unearned investment gains exceeded $4 billion.

This article necessarily reflects only a slice of the market. The group considered here reflects perhaps a third of total gross reinsurance premium written worldwide in Q1.

One complication for inclusion lies in reporting. Not all reinsurers make a quarterly report, although US companies listed on US stock exchanges are required to do so (for now at least; this requirement is under review). Others, especially those listed on other stock exchanges, may deliver a non-statutory quarterly ‘trading statement’, although many lack sufficient detail to be included in the aggregate numbers above.

The nineteen reinsurers analysed were chosen because they report quarterly on a somewhat comparable basis. Another 20 or so companies have a meaningful reinsurance book, alongside numerous smaller carriers and multiple ILS vehicles.

Many reinsurers outside the US now report under International Financial Reporting Standard 17. This new method of accounting for risk carriers completely changes the way revenues are recognised and reported. It effectively does away with reserve releases, instead spreading a “contractual service margin” over the future life of existing contracts.

This means, in practice, that re/insurers should be unable to improve their results for an individual period by releasing money reserved for future losses (a period of the pricing cycle known in London as “the cheating phase”). However, reinsurers (including Munich Re) continue to calculate reserve additions and releases, and incorporate those figures into their reported periodic combined ratios, which makes comparisons possible.

Reinsurance results reported today reflect business underwritten a year earlier. We will not learn until Q2, 2027 how business written in the first quarter of this year has actually performed. The bottom line that lies beneath the business that makes up today’s Q1 top-line figures is not a product of the rate charged during those months. In fact, the opposite is true: current profits tend to drive future rates.

Because of that relationship, in the interim, anecdotally, the price of most types of reinsurance (and particularly for peak-perils catastrophe reinsurance) slipped further during Q2, 2026 renewals. That includes a large share of cat-exposed US reinsurance programmes.

Reinsurers produced outstanding results in the first quarter of 2026, and are set to do so at the half-year mark, after a period of relatively benign catastrophe activity. They could continue to perform well for the entire year, provided no major losses occur between now and then, but earthquakes may happen at any time, and the Atlantic hurricane season has just begun. (Forecasts of fewer storms do not necessarily mean lower losses, since a single storm could hit, say, Miami, to inflict a crippling balance-sheet impact on the entire reinsurance sector.)

Barring such an event, the outstanding results that reinsurers have enjoyed so far this year probably mark a peak. That means further relief for cedants in 2027.

* The group includes Berkshire Hathaway, Munich Re, Hannover Re, Swiss Re, RenaissanceRe, Arch, Everest, Convex, SCOR, AXA XL Re, Axis, Hiscox, Hamilton, Conduit Re, Lancashire, Fidelis/Pegalos, Greenlight Re, IGI, and SiriusPoint.