Global Insurers Navigate Challenges with Successful Underwriting and Investment Approaches
In the second quarter of 2022, the ACORD Global Insurance Stock Index posted a return of 15.7%, which was on par with the strong performance of the global equities market, which posted a return of 14.2% during the same time period.
According to ACORD, there is a lot of concern regarding the future of the global economy because of the current economic climate, which is characterised by mixed news. Strong underwriting fundamentals and much bigger investment profits, however, are fueling double-digit returns for global insurers across all market niches.
However, ACORD also sees prospects for increased premium volumes as growing home prices, new and used automobile prices, and insured commercial value all contribute to higher claims costs.
Gains in all industries
There is a high demand for reinsurance, which has led to solid underwriting performance and investment gains.
Revenue growth in property and liability insurance is being driven by higher rates, increased exposures, and investment gains, while inflation and supply chain concerns are having an effect on costs.
Multi-line: Catastrophe losses and rising reinsurance costs are cancelling out substantial investment rewards.
The sector’s vulnerability to the commercial real estate market and the effect of rising interest rates on surrenders are both obstacles for increased returns.
Expenditure Totals by Region
Rate hardening and reduced claims costs propel P&C profitability in LATAM and the Caribbean, while higher protection sales and withdrawals from accumulation products yield mixed outcomes for life revenue.
Although the ongoing conflict in Ukraine and other negative economic pressures add to the region’s sense of unpredictability, the P&C and real estate industries continue to generate healthy returns.
In North America, wildfire losses in Canada have impacted P&C net income. Persistent inflation and the issue over the US debt ceiling have also weighed on profits.
Strong revenue growth in the Asia-Pacific region is not translating into higher profits for insurers because of overall market circumstances.
Capitalization-weighted sum return
Four out of five large-cap insurers have had positive year-over-year growth, with global specialist P&C and reinsurers earning the best returns.
More than two-thirds of mid-cap insurers see double-digit returns thanks to robust earnings growth.
Four Middle Eastern carriers have reported returns exceeding 100%, while the results for all small-cap insurers span a wide range, from -44% to +169%.
Companies with a market capitalization of more than $250 million are included in the ACORD Global Insurance Stock Index, which includes publicly traded life, non-life, and reinsurance firms. Adjusted for dividends and stock splits, quarterly and annual share price movements are analysed here.
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