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Several further North American insurers have joined Travelers and Chubb and others to release their investment results for Q2 and H1 2024. Below, we look at several of the major players and a selection of other interesting examples.
In Q1 this year many companies saw good results, which several said was due to their fixed income returns. They also highlighted the duality of underwriting and investment income as essential for companies in the current market.
Most companies in Q2 have so far reported healthy results with many attributing it to the high-rate environment. However, with the Bank of Canada, European Central Bank, and Bank of England all now having cut rates the US Federal Reserve could also do so before the end of the year.
This could mean a different picture for Q3.
Net investment income for AIG, one of the biggest insurers in the word, was $990 million for the three months ending June 30, 2024. This compared to $837 million for the same period in 2023.
Adjusted After-tax Income attributable (AATI) was $775 million for the second quarter of 2024, compared with $777 million in the prior year quarter, reflecting higher net investment income in General Insurance and improved results in its Other Operations section being offset by lower underwriting income in General Insurance due to business divestitures and an increase in catastrophe losses year-over-year.
Total net investment income for the second quarter of 2024 was $990 million, an increase of 18% from $837 million in the prior year quarter, reflecting higher income from fixed maturity securities and loans, due to higher reinvestment rates, and dividends received from Corebridge in the second quarter of 2024, partially offset by lower equity and alternative investment returns in addition to asset decline from the sale of Validus Re.
Total net investment income on an Adjusted Pre-tax Income (APTI) basis was $884 million, an increase of 14% from the prior year quarter, reflecting higher reinvestment rates and dividends received from Corebridge in the second quarter of 2024.
In General Insurance, net investment income was up 3% from the prior year quarter, "overcoming the headwind associated with the sale of Validus Re" said AIG in its statement, which produced $44 million in net investment income in the prior year quarter. Excluding Validus Re results from the second quarter of 2023, net investment income was up about 10% from the prior year quarter, it added.
In Q1, total net investment income for AIG was $3.9 billion, an increase of 11% from $3.5 billion the year previous, primarily driven by "higher income from fixed maturity securities and loans due to higher reinvestment rates, partially offset by lower alternative investment returns and lower income on Fortitude Re funds withheld assets".
Markel Group has released their results for Q2 and H1 2024. In the press release, the company said that Q2 its investments "engine" was negatively impacted by unfavourable market value movements within its equity portfolio.
"Insurance results included notably strong performance in our
international operations."
“Despite unfavourable movements in the second quarter, we benefited from overall favourable market value movements within our equity portfolio in the first half of 2024,” it said. “Generally accepted accounting principles (GAAP) require that we include unrealised gains and losses on equity securities in net income. This may lead to short-term volatility in revenues and operating income that temporarily obscures our underlying operating performance.”
Net investment income within the investments engine increased 31% and 34% for the quarter and six months ended June 30, 2024, respectively, reflecting higher interest rates and increased investment holdings in 2024 compared to 2023, it said.
"Our insurance engine continued to make steady progress in the second quarter," said Tom Gayner, CEO. "Insurance results included notably strong performance in our international operations, and it is encouraging to see that the corrective actions we've taken since the end of last year, particularly within our professional and general liability insurance product lines, are beginning to bear fruit."
He added that Markel Ventures “continues to impress”. “[It’s] turning in strong growth in operating income despite softening market conditions, and our net investment income continues to grow.”
All three engines contributed to a 5% increase in operating revenues in the first half of 2024 compared to the first half of 2023. The decrease in operating revenues and operating income in the second quarter of 2024 compared to the same period of 2023 was driven primarily by changes in mark-to-market movements within the so-called Investments engine.
"Net investment income, which is included in the results of our Investments engine, reflects the recurring interest and dividend earnings on our investment portfolio for Q2 2024 were $99.79 million," it said.
Massachusetts-based The Hanover Insurance Group reported net income of $40.5 million for Q2, compared to a net loss of $69.2 million in Q2 2023.
Net investment income was $90.4 million, up 3.2% from the prior-year quarter - excluding partnership income and net investment income, which grew 19.5%.
“We expect the current interest rate environment to continue to provide an
accumulating benefit of higher investment yields."
"We are very pleased with our second quarter results," said John Roche, President and CEO at The Hanover. "Our 9% operating return on equity for the second quarter, and 12% year-to-date, are a testament to the progress we have made on our margin improvement initiatives and the resiliency of our business in the face of weather volatility.”
Jeffrey Farber, Executive Vice President and Chief Financial Officer said the company “remained diligent” with its investment portfolio to secure good returns. “Net investment income increased approximately 20%, excluding partnerships, in the second quarter; and together with our new external manager, we will continue to seek attractive investment opportunities in the future. We expect the current interest rate environment to continue to provide an accumulating benefit of higher investment yields,” said Farber.
The company held $9.3 billion in cash and invested assets on June 30, 2024, it reported. Fixed maturities and cash represented approximately 90% of the investment portfolio. Approximately 95% of the company's fixed maturity portfolio is rated investment grade. As of June 30, 2024, net unrealised losses on the fixed maturity portfolio were $620.9 million before income taxes, compared to $630 million before income taxes on March 31, 2024.
Overall, net premiums written increased 5.1%. Operating income was $68.1 million in the in Q2 compared to an operating loss of $68.3 million in Q2 2023.
Smaller automobile and personal lines insurer Mercury General reported net investment income for Q2 2024 of $68.9 million compared to $58.3 million in 2023.
For H1 2024 the total net investment income was $133.9 million compared to H1 2023’s $110.3 million.
The Los Angeles-based company said its net realised investment gains (losses) before tax were $3 million and $(20) million for the three months ended June 30, 2024 and 2023, respectively, and $41 million and $29 million for the six months ended June 30, 2024 and 2023, respectively.
Canadian holding company, Fairfax, which has several subsidiaries including Allied World, Odyssey Re, Northbridge Financial, Crum & Forster, Verassure Insurance, Onlia Agency Inc., and Zenith Insurance Company also released its results.
Founded in 1985, Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management.
It announced net earnings of CAD $915.4 million (£518 million) in the second quarter of 2024, primarily reflecting increased adjusted operating income of $1,119.4 million (£633.4 million) and net gains on investments.
“Net gains on investments of $241.6 million in the quarter was principally comprised of mark to market gains on common stocks of $377.4 million, partially offset by mark to market losses on bonds of $190.8 million,” said Prem Watsa, Chairman and CEO, in the company's statement.
“We ended the quarter with approximately $2.5 billion (£1.41 billion) of cash and marketable securities (prior to Allied World’s subsequent redemption of its $500 million (£282.9 million) of senior notes) and an additional $2 billion, (£1.13 billion) at fair value, of investments in associates and consolidated non-insurance companies owned by the holding company," he said.
Bermuda-based SiriusPoint said in its results that it had a net investment income for H1 2024 of $157 million and total investment result of $103.1 million. Net income was $200.7 million.
For Q2, the net income was $100.9 million. Net investment income was $78.2 million and saw total investment results of $23.3 million.
“Increased investment income is primarily due to increased interest rates."
In its statement, the company said for Q2 that total net investment income and realised and unrealised investment gains for Q2 was primarily attributable to net investment income related to interest income from our debt and short-term investment portfolio of $70.1 million, partially offset by unrealised losses on other long-term investments of $40.6 million. “Increased investment income is primarily due to increased interest rates and our rotation of the portfolio from cash and cash equivalents and US government and government agency positions to high-grade corporate debt and other securitised assets, in an effort to better diversify our portfolio,” it said.
Losses on private other long-term investments were the result of updated fair value analyses, it said.
For H1, it specified that increased investment income was primarily due to increased interest rates and "our rotation of the portfolio from cash and cash equivalents and US government and government agency positions to high-grade corporate debt and other securitised assets, in an effort to better diversify the portfolio".
