Aviva, Generali see largest Q2 market cap declines among European insurers

The top 20 European insurers all saw their market capitalizations decline sequentially in the second quarter, according to an S&P Global Market Intelligence analysis.

Aviva drops out of top 10

Aviva PLC tumbled out of the top 10 to the 14th spot after experiencing a market cap decrease of 32.6% in the second quarter. That marked the largest decline among the 20 largest European insurers.

The U.K.-based insurer's share count had been reduced through buybacks, a B-share scheme and a 76-for-100 share consolidation, all of which were launched after the successful offloading of noncore international assets.

Aviva's move to focus on its core markets is a positive strategy that will boost earnings quality and lower leverage, CFRA Research analyst Jun Zhang Tan wrote in a July 2 research note. The insurer's operational improvements and future business plans indicate reduced business risks with attractive capital returns, according to the analyst.

Generali retains spot despite drama

Assicurazioni Generali SpA saw the second-largest decline in market cap at 26.4% in the second quarter amid a boardroom drama that ended with the re-election of Philippe Donnet as CEO and Andrea Sironi as board chairman amid opposition from the company's second- and third-largest investors. Even with the decline, Generali maintained its spot as the 6th-largest European insurer by market cap.

*Use a template to study European Solvency II SFCR data. *Read about an analysis on the role of insurance in the Russia oil price plan of the G-7 countries.

European insurance stocks lag behind broader index

The STOXX Europe 600 Insurance Index underperformed compared to broader STOXX Europe 600 index in the second quarter. The insurance index fell 12.3% while the wider index declined 10.7%.

The top 5 largest European insurers by market cap remained unchanged quarter over quarter. Allianz SE remained the largest in the second quarter at €73.7 billion despite a quarter-over-quarter decline of 16.4%. Zurich Insurance Group AG, Axa SA, Prudential PLC and Munich Re also kept their places at second, third, fourth and fifth, respectively.

Insurers and reinsurers in Europe are bracing for the continued impact of Russia's invasion of Ukraine on future earnings after experiencing war-related losses in the first quarter. Berenberg analyst Michael Huttner said some insurance companies had exposure to Russia in the early days of the conflict, but they were "negligible for most."

"The reason we remain strongly positive on the sector is that the solvency ratios are very high, the sector has built up significant buffers and its balance sheet can absorb shocks," Huttner wrote in a research note.