Robust economies set to drive insurance growth and profitability, says Swiss
Re Institute

Swiss Re Ltd / Key word(s): Research Update
Robust economies set to drive insurance growth and profitability, says Swiss
Re Institute

16.07.2024 / 10:00 CET/CEST

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  * Major economies are more resilient than expected, with global GDP growth
    forecast at 2.7% in real terms in 2024

  * Non-life hard market expected to continue over 2024 and 2025 as
    inflation and rising claims costs push rates higher

  * Higher interest rates to boost both growth and profitability for life
    insurance business in 2024

Zurich, 16 July 2024 - Geopolitical tensions and higher inflation have led
to economic concern in recent years. Swiss Re Institute's annual World
Insurance sigma report finds that the global economy has remained remarkably
resilient, setting the scene for growth and improved profitability across
the insurance industry.

Jérôme Haegeli, Swiss Re's Group Chief Economist says: "The insurance
industry has reached a new equilibrium after the challenges of recent years.
The global economy has surprised on the upside, which should drive more
demand for insurance. The life sector in particular is one to watch as
higher interest rates drive investment income and consumer demand for
annuities, giving more people secure retirement incomes."

Continuing global growth for 2024 and 2025

Swiss Re Institute estimates that global gross domestic product (GDP) will
grow by 2.7% in real terms in 2024, the same as 2023. This resilient growth
is expected to continue into 2025 at 2.8% in real terms. While the overall
outlook is positive, regions are on different trajectories, with the US
forecast to grow at 2.5% in 2024, while the euro area is expected to show
below-trend growth of 0.7%.

The trend to global disinflation continues. However, returning to target
inflation levels is unlikely to be a smooth journey. In the US, inflation is
expected to return to target in 2025, due to higher-than-anticipated core
services prices. Europe is already near its target inflation levels, driven
by a fall in energy prices in 2023, softer core prices and an expected
deceleration in wage growth.

Profitability for non-life insurance expected to improve

Due to inflation and the resulting rise in claims costs, non-life insurers
have increased rates over recent years. Swiss Re Institute sees higher
prices continuing for personal lines in 2024, moderating into 2025. For
commercial lines, though still positive, rate increases have decelerated
with some markets starting to soften. Overall, non-life premium volume is
forecast to build on the 3.9% growth achieved in 2023, reaching USD 4.6
trillion in 2024 and USD 4.8 trillion in 2025.

Kera McDonald, Chief Underwriting Officer Swiss Re Corporate Solutions says:
"Commercial insurance accounts for almost half of the total property and
casualty market. We expect commercial P&C carriers to maintain profitability
in 2024, as rate trends have enabled lines like property to stay sustainably
priced. The industry has seen single-digit rate increases for property
business written this year. On the casualty side, we observe a trend of
general market softening across most long tail lines."

Property and casualty insurers are expected to improve profitability in
2024, with industry-wide return on equity (ROE) across eight major markets
at 10% so far this year, up from 6% in 2023. ROE of above 10% is forecast
into 2025.

Life insurance boom on the back of higher interest rates

The life insurance industry is facing a double benefit from the higher
interest rate environment, with both top-line growth and improved
profitability. Swiss Re Institute forecasts 2.9% premium growth for the
industry by the end of 2024, reaching a total premium pool of USD 3.0
trillion. Similar growth of 2.7% is expected in 2025. Strong rebounds in
growth should be visible in many key markets, with Western Europe and
advanced APAC returning to premium growth.

A significant growth area for life insurance is the uptake of annuities to
boost retirement savings. In the US, for example, sales of fixed-rate
annuities jumped 63% in 2022 and 36% in 2023. Longer term, advanced markets
are expected to contribute half of all additional premiums over the next 10
years, driven by strong growth in annuities.

For 2024, Swiss Re Institute forecasts that the combination of increased
premium and increased investment income will boost profitability in the life
sector, with the operating results across eight top markets increasing 15%
for the year.

Ranking of insurance markets by total premium pool.

    Rank  Country         Total premium volume                Market Share
                          2023*                 2024e  2025f  2023e
    1     United States   3,227                 3,424  3,584  44.9%
    2     China           724                   812    893    10.1%
    3     United Kingdom  375                   401    420    5.2%
    4     Japan           363                   370    382    5.0%
    5     France          283                   292    303    3.9%
    6     Germany         245                   255    264    3.4%
    7     South Korea     186                   194    205    2.6%
    8     Canada          171                   176    185    2.4%
    9     Italy           159                   165    171    2.2%
    10    India           136                   149    162    1.9%
    11    Netherlands     93                    98     102    1.3%
    12    Brazil          84                    92     98     1.2%
    13    Spain           83                    88     92     1.2%
    14    Taiwan          78                    80     84     1.1%
    15    Australia       74                    76     79     1.0%
    16    Hong Kong       66                    70     75     0.9%
    17    Switzerland     61                    63     65     0.9%
    18    Mexico          45                    50     54     0.6%
    19    Denmark         44                    47     51     0.6%
    20    Sweden          44                    45     48     0.6%

"e"=estimated, "f"= forecast
*Data for 2023 is provisional for Canada, Switzerland, Hong Kong. Data for
2023 is estimated for US, UK, Japan, France, Germany, South Korea, Italy,
India, Netherlands, Brazil, Spain, Australia, Denmark and Sweden.

World Insurance sigma Media Dialogue

Journalists are welcome to join the World Insurance sigma media event via MS
Teams at 11:00am CEST today. Jérôme Haegeli, Swiss Re's Group Chief
Economist, will provide insights into the macroeconomic factors driving
growth in life and non-life insurance.
Kera McDonald, Swiss Re Corporate Solutions' Chief Underwriting Officer,
will explore the commercial insurance sector. There will also be a Q&A
session.

Further information is available here.

How to download this study

Swiss Re Institute's publication " World Insurance sigma 2024" is available
here.

Disclaimer

Although all the information discussed herein was taken from reliable
sources, Swiss Re does not accept any responsibility for the accuracy or
comprehensiveness of the information given or forward-looking statements
made. The information provided and forward-looking statements made are for
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revise or update any forward-looking statements, whether as a result of new
information, future events or otherwise.

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285 7171 or Media_Relations@Swissre.com.
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1947219 16.07.2024 CET/CEST