The era of deliberate insurance: What separates Europe’s top-performing insurers?
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New Howden Re research finds that underwriting discipline, capital efficiency and a strategic approach to reinsurance are key to stronger returns as the market cycle shifts.
Europe’s top-performing insurers aren’t necessarily those holding the most capital. They’re the ones making deliberate decisions about the risks they retain, the capital they deploy and the returns they generate.
As reinsurance pricing softens and capacity returns, insurers have an opportunity to rethink how they manage their balance sheets.
In our latest report, The era of deliberate insurance, we benchmark 42 European non-life insurers over three financial years (2023-2025) to identify what separates the strongest performers – and what others can learn as the market enters its next phase.
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Strong underwriting, smarter capital
Our analysis reveals a clear relationship between underwriting performance, capital efficiency and returns.
The strongest-performing insurers achieved an average return on equity of approximately 22%, compared with a peer median of 9%. They also operated with lower solvency ratios, averaging 186% against a peer median of 216%.
At the other end, insurers with weaker returns and higher solvency ratios generated returns below 5%, despite holding solvency coverage above 330%.
But capital efficiency alone doesn’t explain outperformance.
Underwriting has the strongest relationship with returns, explaining differences in performance roughly twice as well as capital structure. The quarter of insurers with the best combined ratios generated average returns of 17%, compared with just 4% for those with the weakest underwriting results.
“Top performers need both strong underwriting and capital-efficient frameworks,” said Julien Masselot, General Insurance Practice Lead, Capital and Risk Analytics at Howden Re.
Reinsurance as a strategic capital tool
The research also highlights substantial differences in how efficiently insurers use capital.
The capital-light, high-return group held approximately €28 of capital for every €100 of gross written premium. Capital-intensive insurers generating weaker returns held approximately €86 – three times as much capital for about a quarter of the return.
Yet no single ownership structure or business model consistently outperformed.
What distinguished the leaders was a deliberate approach to three factors: how well they underwrite, how much risk they retain and how much capital they hold beyond what they need.
“Underwriting and capital efficiency only work together. A lean balance sheet with a mediocre combined ratio has little to amplify, and a strong underwriter holding far more capital than it needs dilutes its own result. Weakness in one undoes strength in the other,” said Alex Roth, Head of Alternative Solutions International at Howden Re.
For insurers, this means treating reinsurance as more than protection against losses. It’s also a tool for managing capital, retaining risks that generate attractive returns and transferring volatility that consumes capital without sufficient reward.
Reinsurance, investments and capital decisions need to work together.
An opportunity to act
With reinsurance capacity returning and pricing easing, insurers have greater flexibility to align their protection with their capital plans and return objectives.
But the opportunity may be short-lived.
“When conditions change, insurers that review their structure deliberately tend to move ahead of those that renew on autopilot,” Masselot said.
The starting point is understanding how much capital each risk consumes, whether that risk generates sufficient returns and how the balance sheet performs under stress.
Our benchmarking compares reported capital positions rather than stress-tested resilience. A lower solvency ratio is only an advantage if it remains resilient when conditions deteriorate.
At Howden Re, we bring together reinsurance, actuarial, investment and strategic advisory expertise to help insurers make these decisions as one connected balance sheet.
The research points to a clear conclusion: The next phase of the cycle will reward insurers that combine strong underwriting with deliberate capital management.