Luxembourg's insurance and reinsurance sector reached record profitability in 2025. The combined sector profit was €2.65 billion, a 21.5% rise on 2024, per figures from the Commissariat aux Assurances (CAA).
Reinsurance was the standout performer. Premiums written by reinsurers in Luxembourg rose 11% to €20.6 billion in 2025 and have grown 108% over the past decade. Reinsurance sector profits rose 40.8% to just over €1 billion for the year, outpacing the sector-wide 21.5% profit growth by a wide margin.
That divergence is partly a structural feature of how Luxembourg's captive-dominated reinsurance market works. Captive reinsurers domiciled in the Grand Duchy are required to maintain a Provision for Claims Fluctuation, an equalisation reserve captives build up in profitable years and write back when claims experience deteriorates. Because that allocation and write-back cycle operates on a per-captive, per-year basis rather than through the broad risk-pooling that spreads volatility across a traditional insurer's whole book, reinsurance profit in Luxembourg can swing considerably more than the sector average in any given year - a mechanism the CAA has highlighted in past annual reports as central to how the jurisdiction's captive reinsurers manage long-term claims volatility.
Luxembourg's reinsurance market is dominated by captive structures, with approximately 72% of reinsurers estimated to be captives serving multinational parent groups, according to CAA data.
Separately, and on a global basis rather than specific to Luxembourg, Gallagher Re reported that the worldwide reinsurance market posted its strongest combined ratio since 2014 in 2024, at 86.8%, attributing the result to lower catastrophe losses and reserve releases - a favourable global cycle that forms part of the broader backdrop against which Luxembourg's own captive and commercial reinsurers have been operating, even though the CAA's figures reflect Luxembourg-specific results rather than that global statistic directly.
Life premiums rose 6.5% to €33 billion, while non-life premiums increased 1.5% to nearly €17 billion. Across all three segments, total premiums were up 11% year-on-year and 217% compared to a decade ago, the CAA said.
Life insurer profits increased 34.2% to €505 million, more than double the figure from a decade earlier. Non-life insurance profits climbed 33.7% to €1.1 billion. Taken across all three categories, sector profits have risen 243% compared to ten years ago.
The CAA set out the scale of the recovery in its annual report. "After the sharp decline observed in 2022, the insurance and reinsurance sector stabilised its profitability and posted a sector-wide result for the 2025 financial year of €2.65 billion, an increase of 21.5% compared to the 2024 financial year," the regulator stated. The sector's aggregate balance sheet grew 5.7% in 2025 and has expanded 77% over the past decade.
Total headcount across Luxembourg's insurance and reinsurance firms rose 3.4% to 4,979 in 2025. The figure is 5% above the 2023 level and 28% higher than in 2016. Post-Brexit restructuring drew insurers to establish or expand European operations in the Grand Duchy during that period.
The number of companies continued to edge lower. Life and non-life insurers fell 5% to 76 entities in 2025, with that count remaining stable in the first half of 2026. The total number of insurance firms is now 13% below its level a decade ago.
Reinsurer numbers moved in the opposite direction. They rose 1.5% in 2025 and returned broadly to 2016 levels. Luxembourg is one of the two largest captive reinsurance domiciles in Europe by entity count, with 197 captives recorded in 2024, per AM Best data.
The CAA annual report was published on July 28. The regulator is based in Gasperich and supervises the country's insurance and reinsurance sector from that office.
