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Some of Europe’s largest insurers have revealed their H1 and Q2 results including their investment returns, which, like their North American counterparts, has seen a boost from higher interest rates.
The European Central Bank has already reduced interest rates for the eurozone and the Bank of England has been heavily pressured to begin doing so as unemployment climbs in the UK. However, inflation increased by 2.2% in the year to July, according to the most recent statistics made public, which is slightly above the Bank of England’s target of 2% - where the rate had been since May.
Below are some of the major insurers around Europe that have revealed their results.
The UK’s largest insurer said it had an “excellent first half” in its press release. Aviva also said it had “Double digit growth in operating profit, cash remittances and capital generation” and had a “Confident outlook for 2024 and beyond”.
“We are the number one provider of workplace pensions and are planning to launch a new venture and growth capital strategy,” said Amanda Blanc, Group CEO in a statement on the results. “This will open up new investment opportunities for our pension customers and could help unlock billions of pounds of investment into unlisted growth companies.”
Overall, the Group operating profit was up by 14% to £875 million compared to £765 million in the same period for 2023.
General Insurance premiums were up 15% to £6 billion compared to £5.27 billion in the same period for 2023.
In its full year 2023 results, released earlier this year, Aviva said its operating profit was up 9%, with “continued growth momentum across the Group”.
Generali, one of the largest insurance companies in Europe, said in its results on Friday for H1 2024 that gross written premiums increased “significantly” to €50.1 billion, driven by substantial growth in Life and P&C segments. The company, overall, saw a 20.4% increase. However, its asset management results were more complex.
Italy’s insurers have been seeing good investment returns, which has dragged up the national market as a whole.
“We are evolving as a global insurance and asset management player with
an increasingly diversified business profile.”
There was a continued growth in operating result to €3.7 billion led by the contribution of the Life and Asset & Wealth Management segments to the group. The Adjusted net result was €2 billion, a drop of 13.1%, mainly as a result of capital gains and other one-offs recorded during H1 2023, it said.
“Excluding these effects, the adjusted net result would have been stable,” said the company’s press release. “The Group’s Total Assets Under Management reached €821 billion mainly driven by the consolidation of Conning Holdings Limited (CHL).”
“With continued operating result growth and the return to strong positive Life net inflows, our results confirm the resilience of Generali, the effectiveness of our strategy and our ability to deliver value for all stakeholders also in a complex macroeconomic and geopolitical context,” said Generali Group CEO, Philippe Donnet. “We are evolving as a global insurance and asset management player with an increasingly diversified business profile.”
The group’s Asset & Wealth Management operating result grew to €566 million. The Asset Management operating result increased to €255 million reflecting the consolidation of Conning. The operating result of the Banca Generali group rose substantially to €311 million, thanks to the improvement in the net interest margin coupled with the continued diversification of fee income sources and a significant contribution of performance fees. Total net inflows at Banca Generali in H1 2024 were €3.6 billion.
The adjusted net result of the Asset Management segment was €160 million, which was a 6.1% decrease from the same period last year. This, the company said, was influenced by some "one-off costs related to the acquisition of CHL" as well as the dilution effect from the 16.75% stake of Generali Investments Holding held by Cathay Life.
The AUM pertaining to the Asset Management companies was €663 billion, up 28.5% compared to FY2023 also thanks to the acquisition of Conning. Third-party AUM stood at €252 billion compared to FY2023, including €149 billion relating to Conning. Net flows from external clients amount to a loss of €3.8 billion, “concentrated in a few large low-margin mandates” it said.
UK-based specialty insurer, Hiscox, said its investment results for H1 2024 was $152,4 million, which was up from $121.8 million in the same period last year. This is a return of 1.9% year to date as the interest and coupons from cash, debt and fixed income portfolios increased by 48% year-on-year, said Hiscox’s press release. Assets under management at 30 June 2024 were $8 billion.
In general, profit before tax grew 7.1%, to $283.5 million - compared to H1 2023’s $264.8 million and was underpinned by an insurance service result of $240.7 million.
"Our business has built on the momentum from 2023 and delivered
robust growth in the first half."
On investments, Aki Hussain, the Group CEO’s statement was that Bond markets continued to fluctuate on statements from central banks as they assess the inflation outlook, which was largely responsible for much of the changes. “Although the inflationary trend was down, pricing pressures did not ease as quickly as expected. While the European Central Bank and Bank of Canada did cut rates, other central banks did not, with expectations for policy changes pushed further into the second half of the year,” it said. “Market yields remaining at current levels is favourable for our portfolio reinvestment, despite being a mark-to-market headwind in the short term. The reinvestment yield on the bond portfolio was 5.2% at 30 June 2024, up from 5.1% at year-end, with a book yield of 4.8%. Duration is now 1.9 years.”
Hussain said the company will continue to look to “incrementally improve long-term risk and capital-adjusted outcomes through diversification”.
"Our business has built on the momentum from 2023 and delivered robust growth in the first half,” said Hussain. “We are focused on deploying capital to generate growth and investing in underwriting and technology capabilities to build out our advantages. This has delivered an increased underwriting result of $241 million, despite a more active loss environment."
In Q1, Hiscox’s investment income result was $66.9 million compared to Q1 2023's $98.1 million, or a return of 0.8% year to date - compared to Q1 2023's 1.3%. At the time it said this had been "impacted by upwards pressure on bond yields as rate cut expectations moved out in the period".
Beazley said it delivered a record first half year profit of $728.9 million - as it did for its full year 2023 results announced in March – with a profit before tax $728.9 million compared to $366.4 million in 20223.
“Our investment team achieved a strong investment result of $251.7 million or 4.8% annualised,” said Beazley’s statement on the results. This compared to an investment result for the same period in 20203 of $143.9 million. “Our annualised return on equity was 28%.”
“We reduced the duration of our fixed income investments at the beginning of the year, to 1.6 years, to help us manage asset/liability interest rate risks."
In Q1, Beazley said its investment portfolio returned $126 million, or 1.2%, in the first quarter. “Financial markets were buoyed by resilient US economic data, with our equity, credit and hedge fund investments all producing strong returns,” it said.
Beazley added that the higher yield environment, which began to benefit its returns last year, remained in place and continued to support investment returns, the report said. “However, risk-free yields have risen further this year, as expectations for lower interest rates were deferred, and this has generated some mark to market losses in the short-term. As a result, the overall return on our fixed income investments in the first half of 2024 is lower than yields would imply, at 1.8%,” it said.
“We reduced the duration of our fixed income investments at the beginning of the year, to 1.6 years, to help us manage asset/liability interest rate risks, and this helped protect our fixed income return in the period.”
Beazley’s report said that the current yield of its fixed income investments, at 5.0%, provides an encouraging outlook for returns, “although macroeconomic risks remain elevated”.
