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Comparative Statistics: Top 40 EMEA Insurers Remain Resilient To Lingering Pandemic Risks

S&P Global Ratings presents some comparative statistics on our top 40 rated insurers in Europe, Middle East, and Africa (EMEA). We have selected these re/insurers based on their gross premium written (GPW) as of the end of the financial year 2020. The report shows figures in euros. We have used the average exchange rate for the year to convert income statement figures and the year-end exchange rate for balance sheet figures. We consider many quantitative and qualitative factors when rating insurers; the charts and tables highlight some of the key metrics and ratios we consider in our assessments.

About 95% of the top 40 rated EMEA insurers have a financial strength rating of 'A-' and above. We have only selected companies that have a global scale financial strength rating (FSR). The FSRs and component scores in the charts below are based on the main operating company within the group or the consolidated group, rather than the holding company. These ratings reflect strong levels of capital adequacy, as well as the strong competitive position due to these players' size and diversification benefits. Rating changes have been limited in the insurance sector over the past 10 years and this has remained the case despite the disruption caused by the pandemic. Since the beginning of 2020, we have downgraded one and upgraded four companies in the top 40--none of these actions were related to the pandemic.

Chart 1a


Chart 1b


The CreditWatch positive on Societa Cattolica di Assicurazione follows a takeover offer by Assicurazioni Generali (not rated). The positive outlook on Gothaer is due to improving capital position, while the positive outlook on Helvetia reflects improved capitalization and comparably favorable earnings. The negative outlook on Swiss Re reflects that underwriting performance, and consequently earnings, may not be in line with our expectations.

Chart 2


We see solid profitability, robust market share, and good diversification by product and geography across the top 40 insurers. This helps inform our assessment of their business risk profile as either strong or very strong for all but one of the group. Our insurance industry country risk assessments on the cohort also take into consideration the profitability levels in their respective markets.

We believe there is more differentiation within the financial risk profiles across the top 40. Strong capitalization levels are reflected in about 85% of the companies having a capital and earnings score in the top three categories of our eight-point scale. Our risk exposure assessment is moderately low for about 70% of the insurers, which in many cases reflects prudent investment portfolios and strong risk controls. However, the risk exposure of about a quarter of the insurers limits our assessment of their financial risk profile. This is mainly because of their exposure to tail risks--such as natural catastrophes, for large reinsurers--exposure to investment guarantees, and investment risk concentrations, all of which can lead to earnings volatility. Leverage and coverage ratios for the cohort are overwhelmingly neutral, at below 40% and about 4x, respectively.

Chart 3


Chart 4


Chart 5


Chart 6


Chart 7


Chart 8


Chart 9


The GPW of the top 40 rated insurers varies greatly due to the diverse set of players included. Overall, the GPW for the cohort declined slightly by about 1% in 2020 when compared to the premium base for 2019 in reporting currency. The decline is more pronounced at about 4% when we convert these numbers to euros, due to the exchange rate fluctuations.

Chart 10


In 2020, COVID-19 claims affected the top 40 insurers' net combined ratios, albeit not materially for most of them. This has been a negative factor for some business interruption and entertainment and event insurance lines. However, these are unlikely to reoccur because business interruption contracts are being renewed and updated with pandemic exclusions. On a positive note, the drop in claims frequency resulted in material windfall profits for motor insurers in some EMEA regions. Furthermore, motor insurance claims are back to normal after the end of lockdowns in many European countries.

Large reinsurers' net combined ratios have been elevated due to higher catastrophic activity in 2017-2018 and COVID-19 losses in 2020. P/C reinsurance pricing has been hardening over the past 18-24 months following natural catastrophe and pandemic losses. We expect pandemic-related economic and financial risks to remain inherent in insurers' earnings in 2021, mainly stemming from potential capital market volatility, ongoing low interest rates, and potential corporate defaults and rating migration.

Chart 11


In 2020, pandemic-related claims affected the top 40 insurers' net income. Although global multiline insurers (GMIs) are highly diversified, the pandemic dented the earnings of those domiciled in Europe in 2020. A large part of their losses came from non-European markets. The profitability of large reinsurers declined even more, on average, than for the GMIs. For some insurers, volatile capital markets hampered earnings in the first half of 2020, but these recovered during the rest of the year. Rating changes in the corporate bond sector did not greatly hurt the insurance sector because investment portfolios are conservative and the exposure to high yield securities is limited.

Chart 12


The top 40 insurers' return on equity (RoE) varies in line with their profitability. For 33 of the cohort, RoE was lower in 2020 than in 2019 due to lower net income.

Chart 13


Most of the top 40 insurers have conservative investment portfolios, with the majority of investments in highly rated bonds and bank deposits and some exposure to equities, real estate, and alternative investments. Because of the lower exposure to the risky asset classes, the sharp volatility in debt and equity markets has not been a major issue for the cohort.

Chart 14


About 97% of the cohort have a neutral score for funding structure thanks to their relatively moderate leverage and strong coverage ratios, especially when compared with the corporate sector, where we see higher levels of leverage. Generally, we consider capital adequacy to be a rating strength of the EMEA insurance sector. Unlike other sectors, the insurance sector has not needed to materially ramp up capital in recent years, and even in the trough of the pandemic in 2020, EMEA insurers maintained a capital surplus on top of the respective rating requirements.

Table 1

Leverage And Coverage Ratios
2019 and 2020
Financial leverage (%) FCC (x)
2020 2019 2020 2019


24.0 24.9 5.8 7.7


30.0 30.0 10.6 11.0

Munich Re

16.0 12.9 6.7 13.4

Zurich Insurance

30.7 30.1 14.8 16.4


3.6 3.1 (23.3) 31.7

Swiss Re

26.3 23.7 (3.8) 0.3


<40.0* 23.9 >4.0* 5.5


31.4 33.6 9.3 9.4

CNP Assurances

~30.0* 30.0 >4.0*§ 9.3§

Hannover Rueck SE

23.0 25.1 11.9 17.5


23.3 22.7 14.6 17.3


24.8 25.5 5.9 5.1


24.3 24.9 5.2 7.8


N.A. N.A. N.A. N.A.


35.1 33.4 3.5 5.2


25.2 26.9 0.8 7.9

Swiss Life

23.0 24.0 9.1 13.6

Legal & General

40.1 36.7 7.3 11.0

NN Group

13.9 16.9 11.4 11.7

Vienna Insurance

28.3 27.3 6.2 6.8


N.A. N.A. N.A. N.A.


32.1 27.3† 4.4 5.6


34.1 29.6 7.4 9.7


28.6 26.9 4.5 19.0


<30* 27.7 >8.0* 17.6


26.8 29.6 9.7 10.1


25.3 26.1 20.4 21.6


~41.0* 41.0 >8.0* 9.0

UNIQA Insurance

~39.0* 29.3 ~2.0* 6.7


12.7 14.2 41.0 44.8

ASR Nederland

27-29* 29.2 >5.0* 9.8


N.A. N.A. N.A. N.A.


N.A. 25.7 N.A. §6.6


~19.0* 18.7 ~8.0* 12.3


5.9 6.1 23.4 23.4


>19.0* 21.0 >7.0* 10.0


~17.0* 17.2 >4.0* 11.7


N.A. N.A. N.A. N.A.


31.4 26.9 (5.9) 0.8


N.A. N.A. N.A. N.A.
Note: For Talanx, the leverage and coverage ratios are the consolidated ones for Talanx group. *Forecast. §EBIT fixed charge coverage including realised and unrealized gains/losses. N.A.--Not available. VKB--Versicherungskammer Bayern Versicherungsanstalt des oeffentlichen Rechts. W&W--Wuestenrot & Wuerttembergische AG.

As a general principle, we obtain historical data from consolidated financial statements prepared under accounting regimes used for general reporting purposes, such as International Financial Reporting Standards, and information that insurers may provide to S&P Global Ratings. We may make analytical adjustments to the amounts that insurers report in their financial statements and other published information to arrive at these metrics. The objective in making adjustments is to generate measures that are consistent with our criteria, or to level the reporting differences between the entities, in order to ensure consistency across regions, business lines, and accounting standards.

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Varun Bhalla, Dubai + 97143727181;
Secondary Contacts:Liesl Saldanha, London + 44 20 7176 0489;
Patricia Maria Santos, London + 442071760246;
Dennis P Sugrue, London + 44 20 7176 7056;
Volker Kudszus, Frankfurt + 49 693 399 9192;
Research Contributor:Rachit Chauhan, Mumbai;

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