UK Non-Life London Market Insurance Dashboard: 1H24 Results
Underwriting Discipline Supports Profitability Insurers operating in the London market continued the strong momentum in 1H24 after reporting record profits in 2023. Companies are still benefitting from a strong rating environment, which has supported underwriting profitability. Combined ratios also continued to improve due to underwriting discipline, averaging in the low-to-mid 80s, with Lloyd’s of London reporting the strongest results in over a decade. Although still high, great efforts have been made to introduce operational efficiencies via digitalisation initiatives to reduce expenses, especially at Lloyd’s. Rate Increases Continue, Albeit at Lower Levels than in 2023 Fitch Ratings expects positive pricing trends in the London market to continue into 2H24, though at a slower rate than in 2023. This follows a period of high inflation, pandemic and natural disaster losses, and challenges in the cyber insurance sector. Price increases in the London market have kept up with inflation, and in some cases outpaced it, especially in the property (re)insurance lines, with average rises in the high single digits in 2H23. Strong Investment Returns Contribute to Bottom-Line Profitability Strong investment returns, on the back of higher reinvestment yields, significantly contributed to London market insurers’ bottom-line profitability. Beazley and Lloyd’s of London achieved very strong investments results in 1H24 of USD252 million and USD2.1 billion, up from USD144 million and USD1.8 billion, respectively, in 1H23. We expect London market insurers investment performance to remain strong in 2H24 as interest rates remain relatively high.
Hurricane Milton Effect on Global (Re)Insurance Ratings Likely Limited
Hurricane Milton is not likely to affect credit for rated property/casualty (PC) insurers and global reinsurers given very strong capital levels, Fitch Ratings says. However, Florida property insurance specialists, which Fitch does not rate, are vulnerable to the extent the major hurricane generates losses in excess of reinsurance limits.Milton made landfall near Siesta Key, FL as a Category 3 hurricane and traveled across central Florida before moving off the east coast as a Category 1 storm. It has caused considerable economic and insured losses from high winds, substantial storm surge, heavy rainfall, tornadoes and flooding.We estimate Milton’s insured losses will range from $30 billion-$50 billion, the largest insured loss since Hurricane Ian (a strong Category 4) ravaged a similar path in 2022 and caused $60 billion of losses. Milton will be a 4Q and 2024 earnings event for large rated insurers with Florida exposure. The insurance losses will hit reinsurance attachment points, shifting a meaningful amount of losses to the reinsurance market, particularly from the Florida specialist companies with lower retentions.Ultimate losses will also depend on demand surge, as Milton follows closely on the heels of Hurricane Helene, a Category 4 that devastated the southeast U.S. two weeks earlier. Higher demand and limited supply of labor and materials needed to adjust claims and repair/rebuild following multiple large-scale disasters can increase insured losses by 20% or more.Milton will push global industry insured losses thus far in 2024 to over $100 billion, which is the fifth consecutive year losses have crossed this threshold. This heightened level of catastrophe losses will likely limit any potential for rate declines in property catastrophe business in 2025 as (re)insurers maintain underwriting discipline. Florida property experienced flat to 10% rate declines at June/July 2024 reinsurance renewals, reflecting the limited impact of the 2023 hurricane season.The property market could see a hardening of premium rates, depending on the ultimate Milton losses and the amount of additional catastrophe losses for the remainder of 2024. However, the sizable property reinsurance price increases experienced in 2023 are unlikely given the more adequate current pricing environment.A broad spectrum of insurance companies will be affected by Milton as primary Florida homeowners’ writers manage risk accumulations by ceding a large proportion of business to third-party reinsurers. Most large national underwriters do not have substantial market share in Florida and have cut policies in force via non-renewals to manage balance sheet exposure and reinsurance program costs.The Florida homeowners’ insurance market’s precarious position will weaken further with the destruction generated by Milton. The sufficiency of reinsurance coverage is a key concern for Florida homeowners’ specialists given relatively low absolute capital levels, limited business diversification and questions as to their ability to raise capital following large loss events.Florida homeowners’ specialist reinsurance programs are likely able to absorb losses from events up to approximately 1-in-100-years. Losses above such levels could go “over the top” of catastrophe reinsurance programs, leading to a potentially rapid erosion of capital. We do not expect Milton’s losses to exhaust catastrophe reinsurance protection for most Florida specialists; although individual insurers with unique risk concentrations or meaningful modeling errors may report higher-than-expected gross losses. Insurers remain exposed should an additional storm or storms hit Florida this hurricane season.Milton will test the numerous recent Florida legislative and regulatory tort reforms, including the removal of one-way attorney fees and prohibition of the assignment of benefits. However, the financial benefit of the reforms will need to be proven through various catastrophe events before they can be deemed successful and supportive of longer-term private market capacity.
Euroins: Ψήφος εμπιστοσύνης της Fitch Ratings στη Eurohold (μητρική) με σταθερή προοπτική και αξιολόγηση
Σε επιβεβαίωση της πιστοληπτικής αξιολόγησης “Β” και της σταθερής προοπτικής της μητρικής εταιρείας Eurohold Bulgaria AD προχώρησε η Fitch Ratings. Ο διεθνής οίκος πιστοληπτικής αξιολόγησης ανακοίνωσε την αφαίρεση του Ομίλου από τη λίστα παρακολούθησης (Rating Watch Negative).
Η διατήρηση της σταθερής αξιολόγησης και προοπτικής αποδίδεται από τη Fitch στη μείωση του χρέους της Εταιρείας, τον μειωμένο κίνδυνο φήμης και τον μηδενικό κίνδυνο ρευστότητας από τα γεγονότα που σχετίζονται με τη θυγατρική Euroins Romania.
Η Fitch αποτιμά, επίσης, θετικά τη γραπτή συμφωνία των πιστωτών και των ομολογιούχων της Eurohold να μην προβάλουν αξιώσεις ως αποτέλεσμα της υπόθεσης της ρουμανικής ασφαλιστικής εταιρείας, παρέχοντας πλήρη στήριξη στην Εταιρεία.
Όσον αφορά στις οικονομικές επιδόσεις της Eurohold το οικονομικό έτος 2022, η Fitch εκτιμά ότι υπερέβησαν τις προσδοκίες. Αυτό έχει ως αποτέλεσμα το χρέος να διαμορφωθεί σε επίπεδα χαμηλότερα από τα αναμενόμενα, γεγονός που, σύμφωνα με τον οίκο αξιολόγησης, θα οδηγήσει σε περαιτέρω βελτίωση του δείκτη το τρέχον έτος.
Προς αυτήν την κατεύθυνση συνέβαλαν σημαντικά οι ισχυρές επιδόσεις του Ομίλου στον ενεργειακό κλάδο.
CNP ASSURANCES: Αξιολογήθηκε με Α+ από τη Fitch Ratings
Σε μια σημαντική πρόσφατη εξέλιξη, ο διεθνής οίκος αξιολόγησης Fitch Ratings επιβεβαίωσε την οικονομική ισχύ και ευρωστία του γαλλικού ασφαλιστικού κολοσσού CNP Assurances, με την κατάταξή του στην κατηγορία «Α+» και με σταθερή προοπτική.
Σύμφωνα με Fitch Ratings, η αξιολόγηση αντανακλά την ισχυρή κεφαλαιοποίηση, το ιδιαίτερα δυναμικό επιχειρηματικό προφίλ και το σταθερό ιστορικό οικονομικών επιδόσεων της CNP Assurances .
Η αξιολόγηση λαμβάνει επίσης υπόψη τις προσδοκίες ότι η μητρική La Banque Postale S.A. θα ολοκληρώσει την εξαγορά της εναπομένουσας μειοψηφικής συμμετοχής της CNP Assurances και θα γίνει ο μοναδικός της μέτοχος το 2022.
Η άποψη της Fitch Ratings είναι πως η συναλλαγή αυτή θα καθιερώσει την CNP Assurances ως βασικό και αναπόσπαστο μέρος της La Banque Postale S.A. και θα ενισχύσει τη στρατηγική και οικονομική ευθυγράμμιση των επιχειρηματικών επιδιώξεων των δύο εταιρειών. Θα εδραιώσει επίσης τη θέση του Ομίλου στο Bankassurance, διατηρώντας παράλληλα αμετάβλητο το μοντέλο διανομής και διακυβέρνησης της CNP Assurances με πολλαπλές συνεργασίες.