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Global (re)insurance: Underlying profitability improves at H1 but inflation and rate deceleration remain concerns

Insurance Consulting and Technology|Reinsurance
Insurer Solutions

August 24, 2021

Willis Re continues to monitor global (re)insurers’ financial health.

We are pleased to share with you Willis Re’s latest assessment of global (re)insurers’ financial health. This short report summarizes key themes emerging from global (re)insurers’ 2021 H1 results and has been prepared by Willis Re’s Strategic and Financial Analytics teams.

The key takeaways are:

  • Continued favourable pricing, particularly for commercial lines business, supported meaningful premium growth for the majority of the (re)insurers we track.
  • Underlying combined ratios improved significantly in H1 due to rate increases outstripping claim trends. Headline combined ratios also improved, supported by lower than normal personal lines loss frequency, and, for many, robust reserve releases, and came despite a higher than average level of nat cat losses.
  • European solvency ratios improved at H1 21, largely returning to end-2019 pre-COVID levels. H1 21 solvency improvement was mainly due to a rise in risk free interest rates compared to year-end 2020 levels. This provided a boost to sector solvency as the reduction in liabilities, which are discounted at risk-free rates under Solvency II, exceeded the reduction in bond portfolio values. Rising equity markets and retained profitability also provided support.
  • As was the case following Q1 results, analyst consensus earnings estimates edged up due to higher than anticipated premium growth and underlying profitability.
  • Despite the strong H1, two concerns weigh on the outlook: the decelerating rating environment and the prospect of higher inflation.
Contacts

Brian Shea
Managing Director, Strategic and Financial Analytics
Willis Re

Ralph Cagnetta
Executive Vice President, Strategic and Financial Analytics
Willis Re

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