Fitch assesses ‘Strong’ to ‘Very Strong’ profitability for large European composite insurers

Core Insights - Fitch Ratings assessed large European composite insurers as having 'Strong' to 'Very Strong' profitability, supported by diversified earnings sources that provide stability through cycles [1] Group 1: Financial Performance - Financial performance improved in 2024, driven by a favorable market environment in life insurance and improved pricing relative to inflation in non-life [2] - On average, non-life combined ratios were stable, with a consistent contribution from natural catastrophe losses [2] Group 2: Capital Position - Insurers maintain very strong capital positions, with all having very strong Solvency II or Swiss Solvency Test ratios at end-2024 and end-H1'25 [3] - Strong earnings and positive market effects offset higher capital repatriation to shareholders for most companies [3] - Fitch scored the peers as 'Extremely Strong' or 'Very Strong' on its Prism Global model at end-2024, supported by sustained operating capital generation, although Generali's score fell marginally to 'Strong' [3] Group 3: Financial Leverage - Financial leverage ratios ranged from 17% to 25% at end-2024, with expectations for stability or slight decline by end-2025 as companies do not plan to increase leverage [4] Group 4: Company Profiles - Company profile scores for large European composite insurers were either 'aa+' or 'aa', reflecting leading franchises in core markets, large operating scale, and extensive diversification by geography and business line [5] Group 5: Asset Management - The insurers' asset allocation is considered conservative, with high credit quality fixed-income securities accounting for most invested assets [5] - The agency views the peers' asset/liability management as disciplined and sophisticated, with reduced interest rate risk exposure in life portfolios [6] - Non-life reserving practices are considered prudent, with favorable prior-year reserve developments for at least the past three years [6] Group 6: Insurance Financial Strength Ratings - For Insurance Financial Strength ratings, AXA, Allianz, and Zurich are rated AA with a stable outlook; Aviva and Generali are rated A- with a stable outlook; MAPFRE is rated A+ with a positive outlook [7]