This report summarises key themes emerging from global (re)insurers’ financial results for the first half of 2022 and has been prepared by Gallagher Re’s Strategic and Financial Analytics teams.
Key Findings from this report:
- Premium growth averaged 12% in H1, supported by continued favourable pricing for commercial lines and reinsurance business.
- H1 underwriting results remained strong with a 94.1% combined ratio (H1 21: 93.8%), supported by higher premiums, lower natural catastrophe loss impact, higher prior year reserve development, and a lower expense ratio. These positive factors were offset by a higher attritional loss ratio.
- Unrealised investment depreciation contributed to a drop in average ROE to 9.3% at H1 (H1 21: 13.9%).
- European solvency improved to 235% (H1 21: 222%), supported by rising risk-free interest rates and retained profits.
- Shareholders’ equity reduced by an average of 22% in H1, driven by lower market values of bonds and equities held by global (re)insurers.
- Consensus 2023 earnings per share (EPS) estimates were broadly flat following H1 results.
- Additional analysis: Our annual review of reserve adequacy for five US long-tail lines of business shows that workers’ compensation continues to show strong redundancy. The remaining four lines are positioned close to reserve adequacy.