Reinsurance fuels world's fastest-growing P&C insurers
In 2023, the world's top 50 property and casualty (P&C) insurers grew their collective premiums by nearly 9% year over year amid rising insurance and reinsurance coverage prices. The group's gross premiums earned climbed to about $1.50 trillion from $1.37 trillion in 2022, according to an analysis by S&P Global Market Intelligence.
The fastest-growing company in the group last year was Bermuda-based specialty insurer and reinsurer Arch Capital Group, with an increase of 23.1% in gross premiums earned compared to 2022. Arch's reinsurance business was a big contributor to its overall growth, with the segment's net premiums earned rising 47.4% year over year.
In its 2023 annual statement, Arch credited improved market conditions for the reinsurance growth. The global reinsurance market underwent a big shift in prices and terms last year. Reinsurers hiked prices for property catastrophe cover and raised the thresholds at which coverage pays out to cut their exposure to smaller, more frequent natural catastrophes.
Reinsurance also helped push up premiums at French mutual Groupe Covéa, which ranked second in terms of overall growth, with a 19.4% year-over-year increase in gross premiums earned. Reinsurance makes up 37% of Covéa's book of business.
US personal lines powerhouse State Farm was the third-fastest growing P&C insurer in the group in 2023, with an 18.3% growth in direct premiums earned. However, State Farm suffered underwriting losses last year, with the insurer citing "continued elevated claims severity and significant catastrophe activity" in both auto and homeowners business.
But the US P&C industry could return to underwriting profitability in 2024, according to a new S&P Global Market Intelligence report, as personal lines insurers raise rates for auto and homeowners insurance.
In a sign of investor confidence in the sector, several large US-listed P&C insurers saw an increase in their market capitalizations in the third quarter of 2024, a Market Intelligence analysis showed. Erie Indemnity had the largest gain in market cap between June 28 and Sept. 30, with growth of 49%. The Progressive emerged as the second-largest US insurer by market cap after a 22.2% increase during the period.
In the third quarter, the insurance industry as a whole outperformed the broader stock market. The S&P 500 index was up 5.9% when including dividends, while the S&P 500 insurance index rose 13.8%.
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