European insurers are approaching the new year from a position of strength, having benefited from supportive interest rates and pricing cycles over the past two years. However, 2025 is expected to present more challenges, with falling yields and moderating premium rates against a backdrop of moderate economic growth, lower interest rates, and rising geopolitical risks.
Despite these challenges, Fitch Ratings anticipates resilient operating conditions for European insurers. Core credit drivers have varying trends, but overall, they offset each other, presenting a balanced picture. Therefore, the sector is expected to maintain its strong credit fundamentals in 2025.
Strong 2024 Results
European insurance companies are poised to post robust results in 2024. Underwriting margins have significantly benefited from high interest rates in the life insurance sector and elevated pricing levels in the non-life sector across Europe. Higher returns on investments have further bolstered earnings, enabling insurers to maintain or even enhance their capital adequacy.
Fitch’s country-specific an