Aon has released its latest Profitable Growth research, which reviews re/insurer financial performance over the past decade.
The analysis, which covers 120 re/insurers responsible for nearly $2 trillion in gross written premium (GWP), examines compound annual growth rates (CAGR) alongside returns on average equity (RoAE) to identify companies that have maintained profitable growth through both soft and hard market cycles from 2013 to 2024.
According to the report, the group of companies analysed achieved a RoAE of 14.7% in 2024, representing a six-percentage point increase over the 2013-2023 average of 8.7%. The combined operating ratio (COR) for the group was 93.6% in 2024, the lowest recorded since 2006 and a 3.4 percentage point improvement on the ten-year average.
GWP for the group rose by 7.5% to $1.9 trillion in 2024, surpassing the 2013-2023 CAGR of 6.4%. However, this marks the third consecutive year of slowing growth rates, following a peak of 10.2% in 2021.
The research highlights significant differences in profitability across property and casualty segments. For the third year running, the segments with the lowest CORs were those with the most globally diversified portfolios in both insurance and reinsurance, as well as those with a high degree of specialisation.
The global insurance market in the second quarter of 2024 continued its growth trajectory, supported by strong profitability reported by many insurers in 2023 and improvements in the reinsurance sector. During this period, competition among insurers created favourable conditions in the Property market for many risks.
In the first half of 2024, natural catastrophe re/insurance payouts totalled $58 billion, significantly higher than the decadal average of $47 billion. Despite these elevated payouts, reinsurers recorded an average return on equity (ROE) of 17.6% during the same period.
Sherif Zakhary (pictured above), CEO of Strategy and Technology Group and Inpoint for Aon, said insurers need to transition from being product suppliers to performance partners, which involves being proactive, insightful, and closely aligned with client needs across regions and sectors.
“This is why Aon’s Strategy and Technology Group has built its data-driven approach and nurtured its talent to create and execute clients plans for resilience and growth,” Zakhary said.
Drawing on its findings, Aon is advising clients to consider five key strategies to improve relevance and competitiveness: redefining growth strategy, aligning capital with strategy, investing in data-driven decision-making, understanding client and channel needs, and rethinking talent strategy for future market cycles.
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