Major western insurers showing their hands, have short suited Russia

Major western insurers have very limited exposure to the Russian market either via insurance or investments, equity analysts are increasingly saying following reviews of their coverage universe.

Solvency ratios throughout the sector are more than enough to wipe away larger spill-over concerns.

"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," analysts at the Berenberg investment house said in a note to clients.

Only AXA and Generali have direct exposure to the Russian insurance market, analysts at Deutsche Bank have noted. Respective minority stakes in RESO-Garantia and Ingosstrakh represent slightly below 1% of the market capitalisation for both companies, analysts noted.

Investment exposure also "appears to be very small in the context of overall group investments," analysts said. Russian bonds or stakes in gas transit line Nordstream 1 are listed as the major asset types and these are "highly likely to be held in policyholder/client funds rather than shareholder funds."

Only Allianz has reported even remotely notable investment exposure at €2 billion, equivalent to 0.25% of investment assets of €809 billion. The Allianz exposure is mainly in life and is mainly in currency, which means that any impairments are likely to be cushioned by profit sharing with policyholders, Berenberg said.

Beyond that, Deutsche Bank caps the likely investment exposures at a mere 0.05% of policy holder assets at AXA and 0.1% of funds under management at L&G. Berenberg offers the example of Zurich, with asset exposure at 0.02%, in calling sector exposure "negligible".

Russian investment exposures via asset management units are likely "small" against the full stack of funds under management, including a sum less than 0.5% at UK's abrdn and less than 0.04% at M&G, analysts at Deutsche Bank added.

An early kick-on risk could be exposure to central Europe. analysts at Berenberg suggest without further comment. NN Group, Generali, Allianz and Vienna Insurance Group (after Aegon purchase completion) will be in focus.

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