Insurance companies compensate for the cost of natural disasters - L'AGEFI

Insurance companies compensate for the cost of natural disasters – L’AGEFI

The inflation of natural disasters does not affect the growth of the main listed European insurance companies. In the first half of 2022, Allianz, Axa and Generali posted operating profits of 1.2% (€6.7 billion), 4% (€3.9 billion) and 4.8%, respectively. (3.14 billion euros), in particular thanks to the growth of the damage part. Operating profit in the sector increased by 5% at Allianz (€3 billion), 4% at Axa (€2.4 billion) and 3% for the Italian group (€1.3 billion).

However, this part of the global warming claims has not been spared. Losses in the insurance and reinsurance sector due to natural disasters worldwide amounted to $35 billion (€34 billion) in the first half of 2022, and €38 billion from man-made events, according to a preliminary estimate by reinsurer Swiss Re. That amount is less than €49 billion in insured losses linked to catastrophes in the first half of 2021, and still 22% higher than the average for the past decade.

Consequences of the conflict in Ukraine

Generali estimates the cost of natural disasters at 271 million euros during the first half, compared to 218 million euros during the first six months of 2021, driven mainly by the cost of storms that have affected France and Germany since May. Axa, which sets the cost of natural disasters at 4.2% of all its premiums in the damages branch, rules for example that the claims that affected France between May and June will cost it 200 million euros. Proof of just how bad the weather has befallen France – with France Assureurs providing total compensation of €3.9 billion – Allianz France’s total was 102% in the second quarter, 2022, compared to 94.8% a year earlier. At the group level, the cost of natural disasters rose to 4% of premiums in the damage branch, up from 3.1% a year earlier.

In addition to the normalization of car claims, insurance companies are also suffering from the consequences of the conflict in Ukraine. Claims related to the Russia-Ukrainian standoff were estimated at €300 million before tax and net reinsurance in the first half for Axa and €200 million for Allianz, half of which was for the damages subsidiary. Generali, for its part, has set aside 138 million euros in appropriations not related to the branch. In this circumstance, 97 million euros were recorded for bond investments in Russia and 41 million euros for its share in the Russian insurance company Ingosstrakh.

income from bonds

Taken together, all these factors increased the combined ratios, which express the relationship between total costs and premiums collected by insurers in the first half: +0.7 points for Allianz, to 94.1%, and Axa, to 93, 7% and up to +2.8 points for Generali by 92.5%. But the insurers were able to count on the strong financial results in the branch: Axa was thus able to offset a partial technical result with a decrease of 126 million euros with an investment income of 216 million euros (-0.1 million euros in the first half of 2021). The French group explains that it benefits Inflation-linked bonds (ILBs), increased distribution of funds and higher interest rates At Generali, technical income decreased by 155 million euros and investment income rose by 189 million euros.Thanks to the increase in current income from bonds and dividends paid by Banca Generali“. Only Allianz has accumulated an increase in technical result 24 million euros and in investment result 124 million euros.

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