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EMEA insurers maintain strong capital positions and buffers

Europe’s Largest Reinsurers Reported Strong Financial Results

S&P Global Ratings reports that insurers based in Europe, the Middle East, and Africa (EMEA) maintain strong capital positions and buffers, enabling them to absorb external shocks effectively.

Capital adequacy levels for these insurers consistently exceed the 99.99% confidence threshold, underlining the sector’s financial security.

This strength supports generally stable credit outlooks, with average ratings concentrated in the ‘A’ range and a higher share of positive than negative outlooks.

S&P highlights that EMEA insurers rated in the ‘AA’ category all hold at least very strong competitive position assessments. These companies typically report steady earnings, market leadership, and pricing strength.

Insurers with diversified operations across markets and product lines are considered more resilient and tend to maintain stronger business models.

In 2024, primary insurers rated ‘AA’ and ‘AA-’ recorded average return on equity (ROE) of 13.4% and a combined ratio of 92%. These results reflect their ability to manage underwriting risks and sustain profitability.

S&P’s ratings consider several factors, including competitive position, earnings strength, capital structure, and risk exposure.

Most rated EMEA insurers fall within high credit quality categories, with 63% of financial strength ratings in the ‘A’ range and 9% in the ‘AA’ range.

Those in the top category combine strong underwriting, pricing power, and income diversification. S&P’s recent analysis focused on eight insurers: Allianz SE, Aviva PLC, AXA, Covéa Cooperations, Legal & General Group PLC, Sampo PLC, Talanx AG, and Zurich Insurance Co.

  • Allianz SE holds a stable AA rating, backed by broad market reach across Europe and growing presence in Asia-Pacific. The group reported a 7% rise in insurance revenue and an ROE of 18.2% in 2024, supported by earnings from asset management units such as PIMCO.
  • Aviva PLC, rated AA- with a stable outlook, benefits from strong branding and leadership in the UK, Ireland, and Canada. Despite lower IFRS 17 net income, the insurer achieved a 12% increase in insurance revenue, driven by premium growth and acquisitions.
  • AXA maintains an AA- rating with a positive outlook, reflecting its diversified operations and improved property/casualty results. Strong capitalisation and revenue growth offset high shareholder payouts. S&P also notes that AXA’s position remains stable despite pressures from France’s sovereign credit rating.
  • Covéa Cooperations, rated AA- with a negative outlook, benefits from a strong position in France and risk diversification following its acquisition of PartnerRe. The purchase supports more stable earnings by reducing concentration risks.
  • Legal & General Group PLC holds an AA- rating with a stable outlook. The firm leads in pensions and asset management in its main markets. Its limited international reach is offset by consistent earnings performance.
  • Sampo PLC is rated AA- with a stable outlook. Its core strength lies in Nordic property/casualty insurance, with expanded operations in Denmark. The group has improved net income and underwriting outcomes, although weather-related claims increased.
  • Talanx AG, rated AA- with a stable outlook, has broadened its international exposure and balanced its portfolio. Improved underwriting and disciplined pricing support its profitability and credit standing.
  • Zurich Insurance Co. Ltd. maintains an AA rating and stable outlook. The group’s balanced life and non-life operations, along with steady income from subsidiaries, underpin its global leadership and revenue growth.

Overall, S&P emphasises that insurers with stronger competitive positions achieve more consistent profitability. The adoption of IFRS 17 has also contributed positively by reducing the present value of future claims, supporting stronger combined ratios.