Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • December 2011
12

Swiss Re warns of low insurer profits for 2012

Open-access content Thursday 15th December 2011 — updated 5.13pm, Wednesday 29th April 2020

Swiss Re’s economists say the fortunes of the non-life insurance industry are unlikely to pick up until after 2012...

2

The reinsurer's publication "Global insurance review 2011 and outlook for 2012 and 2013" was presented at the Swiss Re Economic Forum in London. It said the insurance industry had "successfully restored its capital base to a higher level compared to the beginning of the financial crisis".

Warning of lower investment yields will reduced profitability this year, and weak economic growth in the mature markets will constrain premium expansion, it predicted non-life profits will improve again after markets harden, probably late 2012.

It said: "As economic conditions improve through 2013, the real premium growth rate will accelerate from about 1% in 2011 to 3% in 2013 in developed markets. Emerging markets will continue to achieve real premium growth of 7% to 9% through this period."

Three challenges

Kurt Karl, chief economist, Swiss Re, said: "The insurance industry faces three main challenges from the current economic and political environment: low government bond yields; the euro debt crisis; and slowing growth with elevated inflation in the emerging markets."

"Currently, the greatest risk to the economic outlook stems from political developments in Europe, which could result in disorderly sovereign defaults or even exits from the European Monetary Union.

"This is followed closely by risks associated with the political stalemate in the US, which is preventing the implementation of sensible fiscal adjustments that could support growth while reducing the deficit.

"The situation in these two major regions has increased the risk that they will both experience a prolonged period of low growth, low inflation and low interest rates."

He added: "Inflation risk is still a few years down the road in developed markets. But as weak growth makes fiscal consolidation difficult, the incentive to deliberately allow inflation in order to reduce sovereign debt levels is strengthening."

Premium growth

Swiss Re predicted low non-life business profitability in 2011 due to cat losses. There would also be more moderate premium growth than previously projected because of the economic worries.

It warned on investment returns too, claiming higher interest rates could be coming in 2013.

"Capitalisation of non-life books looks strong on an accounting basis, but has to be taken with some caveats. The assets are inflated due to exceptionally low interest rates and the liabilities might be understated."

On the Eurozone crisis Darren Pain, senior economist, Swiss Re said : "A 50% haircut on Greek, Irish and Portuguese sovereign bonds could be readily absorbed in insurers' existing capital resources. More challenging would be a haircut of that size also covering Spanish and Italian debt.

"In that case, write-downs could lie anywhere between 25% and 35% of shareholders' equity."


Source: Postonline

This article appeared in our December 2011 issue of The Actuary .
Click here to view this issue

You may also be interested in...

2

KPMG adds four to insurance actuarial teams

KPMG has announced the appointment of four principal advisors to its life and general insurance actuarial teams in the UK...
Thursday 15th December 2011
Open-access content
2

Study reveals supply chain risks in China

A study commissioned by FM Global revealed a natural catastrophe in China on the scale of the 2011 Japan earthquake and tsunami would have an even more severe impact on supply chains, given the country’s critical role in global manufacturing...
Thursday 15th December 2011
Open-access content
2

US P&C losses climb to $38.6bn

AM Best has released its estimates for catastrophe-related losses experienced by the US property & casualty industry through the first nine months of 2011, which show that losses so far have nearly doubled total year-end 2010 losses...
Thursday 15th December 2011
Open-access content
2

China's P&C growth behind average

Reinsurance broker Aon Benfield says China’s property and casualty insurance growth has been too slow..
Thursday 15th December 2011
Open-access content
2

Government launches consultation on ECJ gender ruling

The government has launched a consultation on how insurers can use gender as a risk factor following the European Court of Justice ruling in the Test-Achats case...
Thursday 15th December 2011
Open-access content
2

Final Solvency II deadline Jan 2014, says Hoban

Insurers will be expected to fully comply with Solvency II by 1 January 2014, according to financial secretary to the Treasury, Mark Hoban MP...
Thursday 15th December 2011
Open-access content

Latest from General Insurance

td

Brain power

The latest microchips mimic cerebral function. Smaller, faster and more efficient than their predecessors, they have the potential to save lives and help insurers, argues Amarnath Suggu
Wednesday 1st March 2023
Open-access content
bl

'Takaful' models of Islamic insurance

Ethical, varied and a growing market – ‘takaful’ Islamic insurance is worth knowing about, wherever you’re from and whatever your beliefs, says Ali Asghar Bhuriwala
Wednesday 1st February 2023
Open-access content
il

When 'human' isn't female

It was only last year that the first anatomically correct female crash test dummy was created. With so much data still based on the male perspective, are we truly meeting all consumer needs? Adél Drew discusses her thoughts, based on the book Invisible Women by Caroline Criado Perez
Wednesday 1st February 2023
Open-access content

Latest from December 2011

2

One-liners abound as laid-back Liverpool hosts GIRO

Reemas Inahsek reviews the Actuarial Profession’s GIRO 2011 conference
Monday 12th March 2012
Open-access content
2

British Airways announces £1.3bn longevity trade

British Airways’ Airways Pension Scheme has announced a further £1.3bn longevity insurance contract - taking its hedge on increasing life expectancy to 40% of pensions in payment...
Friday 30th December 2011
Open-access content
ta filler

First Actuarial hires duo for investment and pension tasks

First Actuarial has announced two actuarial appointments in the areas of investment and pensions...
Friday 30th December 2011
Open-access content

Latest from formbuilder_item_removed

2

Implementing IFRS 17 Discount Curves: Theoretical and Practical Challenges

The International Financial Reporting Standard (IFRS) 17 requires liability cash flows to be discounted at rates that reflect the characteristics of the cash flows, including their liquidity
Tuesday 3rd September 2019
Open-access content
2

Profit Emergence Under IFRS 9 and IFRS 17: The impact of choice of liability discount rate

With the IFRS 17 accounting standard, insurers need to understand the patterns of profit emergence that arise under the standard, and how current business and methodology decisions affect such patterns.
Wednesday 10th July 2019
Open-access content
2

Whitepaper: Aggregation and diversification of the IFRS 17 Risk Adjustment

This paper forms part of a series of high-level papers designed to provide an introduction to different features of the risk adjustment that should be considered in advance of implementation.
Tuesday 29th January 2019
Open-access content

Latest from 12

2

One-liners abound as laid-back Liverpool hosts GIRO

Reemas Inahsek reviews the Actuarial Profession’s GIRO 2011 conference
Monday 12th March 2012
Open-access content
2

British Airways announces £1.3bn longevity trade

British Airways’ Airways Pension Scheme has announced a further £1.3bn longevity insurance contract - taking its hedge on increasing life expectancy to 40% of pensions in payment...
Friday 30th December 2011
Open-access content
ta filler

First Actuarial hires duo for investment and pension tasks

First Actuarial has announced two actuarial appointments in the areas of investment and pensions...
Friday 30th December 2011
Open-access content

Latest from small_opening_image

2

COVID-19 forum for actuaries launched

A forum for actuaries has been launched to help the profession come together and learn how best to respond to the deadly coronavirus sweeping the world.
Wednesday 25th March 2020
Open-access content
2

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.
Wednesday 25th March 2020
Open-access content
2

Grim economic forecasts made as countries lockdown

A sharp recession is imminent in the vast majority of developed and emerging economies as the deadly coronavirus forces businesses to shut down across the world.
Tuesday 24th March 2020
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Shape the Future of Insurance

London (Central)
£ excellent package
Reference
149090

Senior Pricing Actuary - Life Reinsurance

London (Central)
£ excellent
Reference
149089

Insurance Investment Leadership Opportunities

Flexible / hybrid with 2 days p/w office-based
£ dependent upon experience
Reference
149088
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ