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Allianz, Generali higher Q1 profit; UK watchdog monitoring insurers' capital

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Allianz, Generali higher Q1 profit; UK watchdog monitoring insurers' capital

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

First-quarter earnings

* Allianz Group's maximum exposure to the Ethiopian Airlines crash and subsequent grounding of Boeing Co.'s 737 Max 8 aircraft is €150 million, CFO Giulio Terzariol told journalists May 14, the day it reported first-quarter earnings. But he added that it was "rather unlikely" that the insurer's Boeing claims would reach that level, and that even if they did, "that would definitely be something we are able to sustain." The German insurer posted net income attributable to shareholders of €1.97 billion for the quarter, up 1.6% from €1.94 billion in the year-ago period.

* The first-quarter net result of Belgium-based Ageas SA/NV rose to €251.4 million from €247.7 million in the same period in 2018. Its EPS rose to €1.30 in the period from €1.25 a year ago. The insurer's life business' net result slid year over year to €223.0 million from €251.9 million due to timing differences on capital gains, while the nonlife business' net result dropped to €34.9 million from €47.5 million due to one-off expenses.

* Generali reported first-quarter group net profit of €744 million, up 28.1% from €581 million a year ago. The Italian insurer said the increase reflected the result from disposals and a lower impact from taxes, although the non-operating investment result dipped on the back of higher net impairments, mainly on investment funds, and lower realized gains.

* Dutch insurer NN Group NV's net result increased 28.4% to €512 million in the first quarter from the €399 million recorded a year ago. Basic EPS climbed year over year to €1.49 from €1.15. The operating result soared 49.6% to €468 million from €313 million a year ago, which reflected the negative impact of a storm in January 2018, while the current quarter benefited from a dividend from an indirect stake in the former ING Life Korea.

Insurance brokers acquired

* Higos Insurance Services Ltd. completed the acquisition of fellow U.K.-based insurance broker Insurance Group Ltd. Managing Director Laurie de Mel and 18 employees from latter will continue working for the company under its new ownership. Higos Insurance is a unit of London-based Global Risk Partners Ltd.

* Arthur J. Gallagher & Co. has acquired Swiss insurance broker Verbag Versicherungsberatungs AG for undisclosed terms. Verbag offers commercial lines, employee benefits, accident & health and high-net-worth personal lines brokerage and consulting services.

Regulatory buzz

* The U.K. Prudential Regulation Authority is "carefully" watching for further signs of weakening in capital requirements calculated by life insurers' internal models, the regulator's executive director of insurance supervision has said. David Rule said there were signs that U.K. life insurers were suffering from so-called model drift — the risk that capital requirements calculated using an internal model under Solvency II weaken over time "such that they no longer reflect the risks to which the firm is exposed."

* The Polish Financial Supervision Authority is planning an overhaul of the insurance oversight, with a new deputy head post to be created to oversee the market, news agency PAP reported May 10, citing Puls Biznesu. The FSA's head, Jacek Jastrzębski, said new legislation is being drafted, and the appointment could be made in the summer. Jastrzębski also said the FSA should revise its core review and stress tests for insurers to get a comprehensive overview of investment risk on the insurance market.

In other news

* Swiss insurer Chubb Ltd.'s shareholders approved an annual dividend of $3.00 per share, or 75 cents per share every quarter — an increase of 3% from the previous annual payout of $2.92 per share, or 73 cents per share quarterly.

* British insurer Esure Group PLC named QBE Insurance Group Ltd. Group COO David McMillan as its next CEO. He is expected to join the company in August, subject to regulatory approval.

Featured during the week on S&P Global Market Intelligence

Lloyd's of London needs to get back to basics, says Allied World exec: Allied World's vice president of business development in the U.K., Darren Rowe, said the 330-year-old market needs to focus on complex risks, blaming many of the challenges it has faced on diversification into "relatively straightforward risks."

Ageas interested in M&A in new European markets, but not at any cost, CEO says: Ageas is reportedly interested in buying insurers in Portugal and Spain, and although its CEO declined to comment on any specific deals, he said he did not exclude a deal in a new European market, such as Spain.