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Dutch insurers post YOY rise in profits; Allianz raises stake in Euler Hermes

S&P Global Market Intelligence offers our top picks of insurance news stories and more published throughout the week.

Insurers report Q4'17 results

* Allianz Group reported preliminary net income attributable to shareholders of €1.43 billion in the fourth quarter of 2017, down 22.3% from €1.84 billion in the prior-year period. For full year 2017, Allianz's attributable net income was €6.80 billion, compared to €6.96 billion in 2016. In an earnings conference call, CFO Giulio Terzariol said property and casualty insurance is top of the company's list as it seeks further acquisitions but CEO Oliver Bäte stressed that the company would not rush into any deals.

* Aegon NV reported a 110% year-over-year increase in fourth-quarter 2017 profit to €986 million, thanks to a nonrecurring benefit from recent changes to U.S. corporate tax laws. For full year 2017, net income came in at €2.36 billion, up from €586 million in 2016. CEO Alex Wynaendts told analysts that as a result of the "very significant progress" made in 2017, the company is "well on track to deliver on our targets in 2018," and that its U.S. asset management business is ready to put behind it a long-running investigation by the U.S. SEC into modelling errors.

* NN Group NV reported fourth-quarter 2017 consolidated net result of €700 million, up from €148 million in the prior-year period. For full year 2017, NN Group's net result reached €2.11 billion, up from the year-ago €1.19 billion.

* Lancashire Holdings Ltd. swung to an after-tax loss attributable to the company of $5.4 million in the fourth quarter of 2017 from an attributable after-tax profit of $51.1 million a year earlier due to catastrophe losses. Full-year 2017 attributable after-tax loss stood at $71.1 million, compared to the year-ago attributable after-tax profit of $153.8 million. Fourth-quarter 2017 combined ratio stood at 119.5%, while full-year 2017 combined ratio was 124.9%. A combined ratio above 100% indicates underwriting loss.


* Standard Life Aberdeen Plc said it will take a £40 million charge due to a decision by Lloyds Banking Group Plc and unit Scottish Widows Group Ltd. to terminate their long-term asset management arrangements with the company, including the management of about £109 billion of assets, to pave the way for a review of the contract.

* Insurers could incur €1.83 billion in costs due to Hurricane Irma, which hit the Caribbean islands of St. Martin and St. Barthelemy in September 2017, according to the French Insurance Federation. The French insurance lobby had previously projected the cost of Hurricane Irma at €830 million, Reuters reported.

* Cyclone Burglind, which hit Austria, Belgium, France, Germany, Ireland, Luxembourg, the Netherlands, Switzerland and the U.K. between Jan. 2 and Jan. 3, caused insured property market losses of €643 million, according to PERILS' initial loss estimate for the calamity.

M&A buzz

* Allianz Group raised its stake in Euler Hermes Group SA to 92.43%, after acquiring an additional 29.43% of the French firm's share capital through a cash tender offer, representing a total investment of about €1.5 billion.

* Prudential Plc's M&G Investment Management Ltd. has been shortlisted as one of the potential buyers of UK Asset Resolution Ltd.'s £5.5 billion mortgage loan portfolio, Sky News reported.

* Vienna Insurance Group AG completed the acquisition of Bosnia and Herzegovina-based insurer Merkur Osiguranje d.d. from Merkur International Holding AG, having secured local regulatory approvals.

In other news

* The Council of the European Union agreed to a proposal by the European Commission to extend the transposition deadline and application of new rules on insurance distribution. Following the agreement, the transposition deadline of the new rules was set for July 1 and the application date for Oct. 1.

* AXA expects the partial IPO of its U.S. operations grouped under Axa Equitable Holdings Inc. to take place in the second quarter, although there can be no assurance that it will be completed during the expected timeline.

* Kanye West and a group of Lloyd's of London syndicates settled a $10 million lawsuit relating to the singer's cancelled shows, City A.M. reported.

* Zurich Insurance Group AG, through Zurich Insurance Co. Ltd., issued $500 million in dated subordinated bonds.

* Russian insurer PAO Rosgosstrakh plans to set up a life insurance unit, according to Vedomosti. The insurer wants to develop life insurance in order to benefit from the rapid growth in this segment, the company's representative told the newspaper.

Featured during the week on S&P Global Market Intelligence

Europe's insurers stock up on riskier assets to combat low interest rates: Insurers are on a quest for higher investment returns, but are treading carefully as heavy Solvency II capital charges focus their minds.

Pricing and life unit driving SoftBank's interest in Swiss Re, analysts say: Swiss Re has the lowest valuation of its peer group, and its life business has attractive cash flows, but analysts are still puzzled about the potential tie-up.

Lloyd's underwriters braced for change in capital rules: Starting in 2018, Lloyd's will no longer allow members to fully fund their underwriting at the insurance market with bank letters of credit and other sources of Tier 2 capital, which could put pressure on some firms.