Fitch Ratings’ outlook for the EMEA insurance sector is “neutral
” for 2026, as Fitch expects the underlying operational and business conditions to remain mostly unchanged, compared to those in 2025.
Core credit drivers trend in different directions but overall leave a b
alanced view. We, therefore, expect sound credit fundamentals in 2026 for the sector, characterized by strong capitalization and robust profitability.
In European non-life insurance, we expect price increases and revenue growth to decelerate across most segments. Persistent underwriting discipline, combi
ned with high investment yields and cost focus will support steady operating profits.
The London market stands out with a “deteriorating” outlook, reflecting – as for global reinsurance
– a pick-up in competition, leading to a sharper rate softening than elsewhere, which could erode underwriting margins, albeit from strong levels.
In European life insurance, we expect steady net inflows into savings and retirement products, reflecting cus
tomers’ caution amid heightened macroeconomic uncertainty. Techni
cal margins, still supported by high long-term sovereign yields and steady fee income, underpin a strong profitability outlook across Europe.
Potential investment losses from falling asset values and rising defaults, and non-life prices lagging claims inflation are key risks. Non-life prices could soft
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n more than anticipated, while weaker investor sentiment in life c
ould weigh on revenue growth. Slow climate risk mitigation, declining insurability, and related higher earnings volatility also build risks.
Non-Life: Slowing Revenue Growth, Resilient Margins
Fitch expects weak but steady GDP growth in the eurozone and the UK, and slower price increases in most markets, whic
h will limit revenue growth. Property/casualty (P/C) pricing cycles remain uneven: in personal lines, the UK is furthest through the cycle, with rates improving aga
in in motor. Germany was the last to align pricing with inflation to restore margins. Following this normalization, we revised the sector outlook for German non-life t
o “neutral” from “improving.” In commercial lines, we expect rates to continue softening from a high base amid intensive competition, pressuring margins and supporti
ng a “deteriorating” outlook for the London market, as for global reinsurance.
We expect broadly stable, healthy underwriting margins, as most European non-life insurers should be able to
raise tariffs in 2026 to sufficiently offset steadily rising claims inflation. Cost reductions, including AI-driven efficiencies
port operating margins. Despite some alleviation from lower reinsurance costs, the retention of high-frequency natural catastrophe risk remains high.
London Market ‘Deteriorating’
The revision of the London market outlook to “Deteriorating” from “Neutral” reflects our expectation that renewal rates will continue to fall in 2026. This follow
s the pricing peak in 2024 and significant rate-softening in 2025, particularly in property re/insurance, where year-to-date reductions have reached the low double digits amid intense competition. We e
xpect London market insurers’ underwriting margins to deteriorate in 2026, with combined ratios rising to the high 90s from an average in the low 90s in the first quarter of 2025, assuming natural-catastrophe losses remain within budgeted thresholds.