Multiline insurers leveraged scale to better fend off 2022 threats: S&P

Global multiline insurers have leveraged scale and diversification to better weather current uncertainties in the macroeconomic and geopolitical environment than less diversified peers,  S&P has said in a report.

“Having navigated inflation, market volatility, and geopolitical turmoil well in 2022, global multiline insurers look set to do the same this year,” said S&P Global Ratings credit analyst Marc-Philippe Juilliard. “While ongoing inflation is likely to increase both the average cost of claims and general expenses, we believe that higher investment yields will support profitability.”

Higher capitalization for the group along with competitive advantages, and business and geographical diversification allow the group easier navigation to benefit more from favourable conditions in the good times and suffer less when times are tough.

Underwriting discipline in property & casualty, especially in commercial lines, “will sustain robust operating performance” in the non-life segment, analysts said.

All the global multilines with P&C businesses analysed by S&P reported underwriting profits with combined ratios below 100%, and some even close to 90%, S&P analysts noted. Commercial lines generated strong profits as tariffs kept pace with threats and claims remained under control.

“This was especially noticeable for large players focused on commercial lines such as Chubb, AIG, Zurich, QBE, and AXA,” S&P said.

Personal lines were said to be profitable “in most markets, but less so than commercial lines” as claims inflation and natural catastrophes hit harder and re-pricing efforts took more time. US personal lines failed to pass the profit test on deterioration in personal auto.

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