European Insurer Value Analysis 2021

CGI has been privileged to support “European Insurer Value Analysis 2021” conducted by ACORD & Alchemy Crew – a ground-breaking study of financial performance of 40 European insurers over the last 5 years. Bill Pieroni @ACORD CEO, Sabine VanderLinden @Alchemy Crew CEO, and myself met at an Insurance Times webinar yesterday to discuss key findings.

The methodology used was cash flow returns over invested capital. Using the cashflow metric allowed ACORD to compare performance of the P&C insurers, Life assurers, and insurance with non-insurance revenues, on a like-for-like basis. The 5 years average performance was 7.5% cashflow return on invested capital, with top-quartile performers returning 16.9% and bottom-quartile 4.0%. Typically smaller, often single-country focused companies, outperformed large multinationals. Interestingly mutuals performed slightly better than public companies, also P&C better than Life.

 ·      Winning strategies observed active management of capital, proactive M&A, product differentiation, and management of independent distribution channels.

·      High performing companies exhibited a positive culture, strong leadership, and Board diversity. They also develop and nurture talent from within with a focus on core capacity and competency around underwriting claims, operations, and IT.

 ·      Most importantly, the winners were very focused and selective in resource allocation and deploying their capital only where it mattered – this applies equally to product, distribution, as well as IT investment and digital. Their technologies were “state of the market”, not obsolete but also not “quantum computing”

 ACORD CEO Bill Pieroni said: “ACORD’s proprietary methodology enables benchmarking across a wide spectrum of carriers and geographies. Key findings include the role of informational scale and scope economies; talent and culture as key differentiators; and the role of focused execution in value creation.”

 Alchemy Crew CEO Sabine VanderLinden commented: “It is eye-opening to re-evaluate value creators from value destroyers within our fast-moving digitization world using comprehensive criteria of value creation. The report does not only tell us the what, it gives us clues to the why and the how.”

 CGI’s Paul Wishman summarised: “The most important ‘so what’ from the report was that the winning companies are the most agile ones, they achieve ‘more with less’. Every invested Euro, Pound, or Swiss Franc delivers maximum value. We at CGI recognise the daily challenges our clients face and support them to achieve maximum returns from investments in infrastructure, IT, and digital transformation. We look forward to co-operating with ACORD and Alchemy Crew in translating the truly insightful ‘European Insurer Value Analysis’ into actionable business decisions, which CGI clients can implement.”