Europes general insurance sector saw its profits fall by £19bn between 2007 and 2011, according to analysis published by PricewaterhouseCoopers yesterday.
The aggregate pre-tax profits of the industry in 2007, before the economic crash hit, totalled £38.2bn. A year later, in 2008, they had slumped by 54% to £17.6bn as the effects of the financial slowdown were felt. There was a steady improvement over 2009 and 2010, but 2011 saw profits fall back to £19.2bn - 49.5% less than in 2007.
Investors in general insurance companies saw the average annualised returns on their stakes in firms fall by 37% between 2005/07 and 2010/12, with their average earnings before interest and tax falling from £59bn in 2005/07 to £46bn in 2010/12 - a decline of 22%.
Life insurers also saw their profits drop significantly between 2007 and 2011. The sector's aggregate pre-tax profit in 2007 was £21.5bn, but by 2011 it had dropped to £11.8bn - a decline of £9.7bn, or 45%, according to the consultancy's analysis of data from Thomson Reuters.
Shareholders in life insurance companies experienced a major drop in their investment returns - down by 63% before the period 2005-07 and 2010-12. Their average earnings before interest and tax fell 54% over the same period, from £54.8bn to £25.2bn.
Jonathan Howe, UK insurance leader for PwC, said insurers would hope to see a recovery in performance in their results for 2012.
'Insurers have clearly had a difficult time, post the financial crash. 2011 marks a historic low point for the industry. Low investment returns, regulatory uncertainty and slow economic growth have put huge pressure on insurers' financial performance,' he said.
'2012's results should hopefully start to reflect the hard work that has been put in since the crisis; a focus on underwriting quality, cost control and making capital work more efficiently will start to come through to the bottom line.'
He added: 'Pre-crash profit highs are still a long way off, but we are confident that insurers who have adapted to these changing conditions will reap the benefits.'
