Fitch Ratings assessed all large European composite insurers in its peer group as having ‘Strong’ to ‘Very Strong’ profitability, supported by diversified earnings sources that provide stability through cycles.
The peer group comprises Allianz SE (Allianz), Aviva plc (Aviva), AXA SA (AXA), Assicurazioni Generali S.p.A. (Generali), MAPFRE S.A. (MAPFRE), and Zurich Insurance Company Ltd (Zurich).
The rating agency noted that financial performance improved in 2024, driven by a continued favourable market environment in life insurance and improved pricing relative to inflation in non-life. On average, non-life combined ratios were stable, with a broadly consistent contribution from natural catastrophe losses.
Fitch stated that the insurers maintain very strong capital positions, noting that all had very strong Solvency II (S2) or Swiss Solvency Test (SST) ratios at end-2024 and end-H1’25. Strong earnings and positive market effects offset higher capital repatriation to shareholders for most companies. Fitch scored the peers as ‘Extremely Strong’ or ‘Very Strong’ on its Prism Global model at end-2024, supported by sustained operating capital generation. However, Generali’s score fell marginally to ‘Strong’.
Financial leverage ratios (FLRs) ranged from 17% to 25% at end-2024 (‘aa’ to ‘a’ categories). Fitch expects FLRs to remain stable or decline slightly by end-2025, as companies do not plan to increase leverage, while their capital bases and contractual service margins expand through strong retained earnings.
The large European composite insurers’ company profile scores were all either ‘aa+’ or ‘aa’, reflecting leading franchises in core markets, large operating scale, and extensive diversification by geography and business line.
Fitch views the insurers’ asset allocation as conservative, with fixed-income securities of high credit quality accounting for most invested assets.
In addition, the agency considers the peers’ asset/liability management (ALM) disciplined and sophisticated, supporting their ratings, with reduced interest rate risk exposure in their life portfolios in recent years. The group’s non-life reserving practices are considered prudent, with favourable prior-year reserve developments for at least the past three years.
For Insurance Financial Strength (IFS) ratings, AXA, Allianz, and Zurich are rated AA with a stable outlook; Aviva and Generali are rated A- with a stable outlook; and MAPFRE is rated A+ with a positive outlook.
The post Fitch assesses ‘Strong’ to ‘Very Strong’ profitability for large European composite insurers appeared first on ReinsuranceNe.ws.
