Favourable pricing for commercial lines business, coupled with rate rises for reinsurance and retail insurance supported premium growth for insurers and reinsurers in the first half of 2021, as underwriting results improved significantly for some, reports broker Willis Re.
A recent report by the reinsurance broking arm of Willis Towers Watson (WTW) examines the performance of 18 of the largest re/insurers globally.
The majority of the re/insurers tracked by Willis Re reported further premium growth in H1 2021, with six of these reporting double digit premium increases.
The most significant increase (26%) was seen at QBE, followed by Zurich, AIG, Hannover Re, and then Chubb, all of which reported premium growth above both the European reinsurers average and the U.S. average.
Willis Re attributes the growth to continued favourable pricing for commercial lines business, rate increases for reinsurance and also retail insurance business.
“Management teams are typically expecting favourable pricing to continue for the remainder of the year and into 2022, although some cautioned that rate increases going forward are likely to be less significant, and indeed have already started to ease in certain parts of their portfolios,” says the broker.
Maintaining the trend set in the first quarter of the year, underwriting results remained strong in H1 2021, with the group of re/insurers tracked by Willis Re reporting an average combined ratio of 93.7%, with every firm posting a combined ratio of below 100%.
The solid underwriting performance this year did benefit from the decline in COVID-19 losses, but still occurred against a backdrop of higher than average nat cat losses.
“Most importantly, though, (re)insurers are also legitimately pointing to improved underlying results, with rate increases outstripping claim trends. A number of companies pointed to 2-3 percentage points of underlying improvement,” says the report.
As a result of the solid H1 2021 results, analyst consensus earnings estimates have moved higher, rising by 1.4% on average for 2022 EPS, with the U.S. commercial lines firms rising by 3.4% on average.
Willis Re attributes this primarily to better than expected premium growth and underlying combined ratios.