Fitch Ratings said the three main European insurance groups – Allianz, AXA and Zurich – “successfully managed” the effects of the macroeconomic environment like high inflation and interest rates.
“Allianz, AXA and Zurich successfully managed 2022’s macroeconomic challenges thanks to their very strong company profiles, rigorous risk management and sophisticated asset- liability management,” said Robert Mazzuoli, Director of EMEA Insurance at Fitch Ratings.
Fitch’s report named ‘Peer Comparison: Allianz, AXA and Zurich’ noted new business volumes in life insurance declined due to intensified competition from banks and lower savings rates of private households. Investment income and IFRS shareholders’ capital declined in response to fair value adjustments on the insurers’ bond portfolios.
Allianz, AXA and Zurich’s financial performance remained “very strong” as the insurers used their pricing power to curb the impact of high inflation on earnings and capital, Fitch reports.
Inflation negatively impacted the retail motor business of the three insurance groups, in particular, as spare part prices increased significantly and claims frequency rose, the rating agency said.
Fitch explained that significant price adjustments in non-life, business mix shifts in life and a moderate positive correlation of solvency ratios to interest rates mitigated the effects of the challenging macroeconomic environment.
The three insurance groups were less affected by natural catastrophe claims in 2022, against the trend of rising claims due to climate change, the rating agency noted.
Rising inflation and tightening of monetary policy have continued into 2023. The failures of several banks in the US and Switzerland have added to the nervousness in financial markets, Fitch said.
Fitch said that it expects that the three insurance groups will maintain profitability and capital adequacy on similar levels as in 2022. “Very strong company profiles with dominant market shares and high diversification benefits as well as conservative reserving and rigorous risk management help to offset headwinds from the macroeconomic environment.”
