European re/insurers see mixed bag for Q2 2023

Many of Europe’s largest re/insurers grapple with lukewarm investment income this quarter, largely attributed to portfolio restructuring.

A number of European re/insurers, including MAPFRE, have revealed their quarterly results.

Several of Europe’s largest re/insurers have released their H1 2023 and Q2 2023 results – which, in general, showed solid profits in both underwriting and investment returns. 

However, there were drops for some, with many blaming portfolio and operational restructuring for the dips, especially when compared to 2022 numbers. 

A handful saw a drop in their overall investment, which wasn’t completely unexpected as Europe continues to experience higher inflation than the US and teeters on the brink of recession. Inflation in the 20-country eurozone dropped to 5.3% in July, while GDP grew by 0.3% in the second quarter of 2023. Germany, where two of Europe's largest re/insurers are located, saw a 6.8% inflation rate in July. 

Back in Q1 2023, seasonally adjusted GDP decreased by 0.1% in the eurozone and increased by 0.1% in the EU compared to the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union. In Q4 2022, GDP had decreased by 0.1% in the eurozone and by 0.2% in the EU. 

Compared to their US counterparts, which saw largely positive investment results that heavily favoured fixed income, European re/insurers reported mixed numbers. This trend could reveal that the more diversified portfolios of some companies have been hit harder by market volatility. For instance, European real estate prices are falling, which could have affected – and continue to affect – investment portfolios. 


Spanish giant MAPFRE, one of Europe’s largest P&C insurers – which also has asset management and life insurance arms – revealed its results for H1 2023. These showed that the company's revenue was up 15%, now coming in at over €17 billion, with the business growing 15% in the first half of the year. 

“There was no relevant change in the asset allocation [of the investment portfolio] during the first half of the year,” the organisation said. “MAPFRE has realised €18.4 million in net gains in the first half of the year after tax and minorities [compared to] €22 million in 2022 [for the same period].” 

The insurer’s largest investment section was government fixed income – coming in at €21.2 million – with corporate fixed income (at €7.8 million), real estate, equity and mutual funds, cash, and other investments comprising the other sections in descending size order. For its premiums, the company saw the highest growth in Iberia, at €5.13 billion, which means that the area is once more its largest market, stripping Latin America, at €4.98 billion, of the title. 


For H1 2023, the Swiss insurer saw its group business operating profit come in at $3.7 billion, matching record H1 2022 levels. It also reported its highest ever return on equity at 22.9%, which the group said was one of the greatest results across the industry. 

For its P&C operations, the insurer reported a business operating profit of $2.2 billion, with a 6% reduction year-on-year. Adjusting for currency movements and the non-recurrence of a one-off gain in the prior year, its business operating profit rose by 3%, supported by higher net investment income. The combined ratio was 92.9%. 

“We’ve achieved a return on equity that’s among the highest
in the industry.”

Average group investments were $142.49 billion for 2023 – a 16% decrease compared to 2022’s $169.1 billion. The total return on group investments for 2023 was 2.7%, compared to 2022’s 108% loss. Finally, the net investment result on group investments was $2.56 billion, whilst the net investment return on group investments was 1.8%, compared to last year’s 0.5%. 

“We’ve achieved a return on equity that’s among the highest in the industry, whilst minimising volatility, maintaining a strong balance sheet, and taking advantage of the growth opportunities available to us,” said Group Chief Executive Officer (CEO) Mario Greco. 

Swiss Re 

The other Zürich-headquartered Swiss giant, Swiss Re, reported a net income of $1.4 billion for the first half of 2023. 

The group's return on investments stood at 2.8%, compared to 1.2% in the first half of 2022. The organisation’s return on investment (ROI) continues to benefit from higher income with the recurring income yield increasing to 3.3%, up from 2.6% for the entirety of 2022. Investments during the second quarter of 2023 contributed to an accretive fixed income reinvestment yield of 4.6%, said the organisation. 

"Higher interest rates and steadily increasing recurring income contributed
to an improved investment result." 

Swiss Re's Group Chief Financial Officer (CFO) John Dacey said that, "in spite of macro-economic volatility, higher interest rates and steadily increasing recurring income contributed to an improved investment result. We have maintained our very strong capital position, which allows us to take advantage of attractive business opportunities." 


Germany’s largest insurer, Allianz, revealed little of its investment data in its combined H1/Q2 results

For Q2, its asset management arm saw operating revenues of €1.9 billion, which was down by 2%, adjusted for foreign currency translation effects. Higher performance fees were more than offset by lower assets under management-driven revenues, it said. Oliver Bäte, Allianz CEO, said the asset management segment had shown "resilience" and recorded positive third-party net inflow despite cautious investor sentiment.

It added that its total business volume “surged” by 5.9% to €39.6 billion in Q2. Operating profits did increase by 7.1% to €3.8 billion, with strong performance especially seen in Life & Health and P&C business segments. For H1 2023, total business volume rose 4.8% to €85.6 billion, the company reported. 

Munich Re 

Munich Re, the world's largest reinsurer by written premium, posted a profit of €2.4 billion during the first six months of 2023. 

Despite being one of the first to leave the Net Zero Insurance Alliance (NZIA), Joachim Wenning, Chair of the Board of Management, explicitly mentioned the company’s commitment to achieving its sustainability goals in his statement on the results, noting that, “we’re systematically making progress on decarbonisation in investments and insurance business”. 

The organisation said it generated a profit of €1.15 billion in Q2 2023, compared to €1.58 billion in Q2 2022, and €2.42 billion in H1 2023, compared to €3.06 billion in H1 2022. 

“The higher result during the first half of 2022 was attributable to lower unwinding-of-discount effects and lower major-loss expenditure,” said its statement. “Against the backdrop of a mixed macroeconomic environment, the second quarter featured strong business performance both at ERGO and in the reinsurance segment.” 

Revenue from insurance contracts issued rose year-on-year to €14.17 billion in Q2 – compared to €13.77 billion in 2022. In H1, the figure increased to €28.44 billion, compared to 2022’s €27.03 billion. 

“Munich Re intentionally incurred losses in this quarter that had been realised due to the disposal of investments, primarily fixed-interest bonds.”

The total technical result in Q2 amounted to €2.15 billion – it was €2.57 billion in 2022 – and the investment result rose to €596 million, compared to €317 million in 2022. Regular income from investments rose to €1.76 billion, which was a slight increase from 2022’s €1.75 billion. 

“Munich Re intentionally incurred losses in this quarter that had been realised due to the disposal of investments, primarily fixed-interest bonds,” the organisation said. “This was done with an eye to investing anew at higher interest rates, in turn more quickly profiting from higher-yield bonds.” 

Overall, the Q2 investment result represented a return of 1.1% on the average market value of the portfolio, the company said. Its running yield was 3.3%, and its yield on reinvestment was 4.3%. 

“As [of] 30 June 2023, the equity-backing ratio including equity-linked derivatives amounted to 3.4%,” It added. Comparatively, it was 2.0% as of 31 December 2022. Munich Re’s investment portfolio totalled €209.69 billion as of 30 June 2023; whereas it was at €207.96 billion in 2022.