Global multiline insurers’ (GMI) strong capitalisation, competitive advantages and business and geographical diversification are allowing them to navigate difficult conditions well, S&P Global Ratings said in a report published last month.
GMIs typically benefit more from favourable conditions than others and suffer less when times are tough, with last year being no exception due to their idiosyncratic competitive advantages.
“Having navigated inflation, market volatility and geopolitical turmoil well in 2022, GMIs look set to do the same this year,” said S&P Global Ratings credit analyst Marc-Philippe Juilliard. “While ongoing inflation is likely to increase both the average cost of claims and general expenses, we believe that higher investment yields will support profitability,” he said.
At the same time, underwriting discipline in P&C, especially in commercial lines, will sustain robust operating performance in the non-life segment. Financial market volatility, notably the rapid changes in interest rates, is hitting life business the hardest as it will take time for higher rates to benefit investment returns.
The report added that all the GMIs with P&C businesses reported combined ratios of below 100%, which indicates an underwriting profit, and some were even close to 90%. Commercial lines generated strong profits when tariffs were favourable, and claims remained under control. This was especially noticeable for large players focused on commercial lines such as Chubb, AIG, Zurich, QBE and AXA.
Personal lines were also profitable in most markets, but less so than commercial lines, as claims inflation and natural catastrophes had a greater effect, and tariff increases take longer to be implemented. In the US, personal lines were not profitable due to a deterioration in personal auto results. COVID-19 no longer had a meaningful impact on most players, with a few exceptions in APAC, after having distorted P&C players’ performance indicators in different ways in 2020 and 2021. M