Page 19 - The Insurance Times August 2024

services, along with its direct monitor- The insurance group also offered reas- Swiss Re, noting that stronger under-
ing of the real-time service status of surances that its capital strength will writing results and investment returns
6,000 technology businesses including remain robust following the acquisi- will drive improved sector profitability.
a significant portion of the Fortune tion. On a proforma basis, if the trans- Swiss Re estimated that non-life insur-
500, and its expertise in system failures action had completed on December
ers’ return on equity will improve to
and business interruption losses. 31, 2023, the group would have seen about 10% in 2024 and 10.7% in 2025,
an increase in Gross Solvency II Eco- with progress on both the underwrit-
Utmost Group inks agree- nomic Value from £2,386 million to ing and investment fronts.
£3,150 million, a group solvency capi-
ment to acquire Lombard tal requirement (SCR) coverage ratio “We see underwriting results turning
International of 173%, and a group leverage ratio of positive, supported by high premium
29%, within the 20-30% target range. rates, rising exposures and easing
Utmost Group has announced an claims growth as inflation moderates.
agreement to acquire Lombard Inter- The total consideration for the acqui- Investment returns will continue to
national Assurance Holdings Sarl, sub- sition will be financed through a £200 benefit from the higher interest rates,
ject to regulatory and other approvals. million bank loan, with the remainder while the cost of capital will remain
covered by existing cash reserves. The
The acquisition will include Lombard broadly stable,” the report said, noting
transaction is expected to be com-
International’s leading European busi- pleted by the end of 2024, pending that investment returns in both the
ness, which will become part of Ut- regulatory approvals. non-life and life sectors are benefiting
most International, the group’s inter- from higher interest rates.
national life assurance division. It will In a commentary accompanying the
bolster its presence in key European Hard Market Conditions report, Swiss Re said: An insurance
markets and see the integration of Expected to Ease in 2025 sector in healthy earnings mode will
partner relationships and complemen- as Claims Inflation Soft- attract more capital. This, in turn, will
tary product offerings. drive industry growth and expand risk
ens: Swiss Re
The acquisition will also add £43 billion transfer capacity, enabling the indus-
of assets under administration and Hard market conditions in the global try to contribute more to narrowing
over 20,000 policies to Utmost Inter- non-life insurance sector will continue existing protection gaps in many parts
national. Combined figures for the end this year, but will begin to ease in 2025, of the world.”
of 2023 indicate that Utmost Interna- as general inflation and claims inflation However, Swiss Re warned in the re-
tional would have had £100 billion of conditions soften, according to Swiss Re port that non-life insurers need to re-
assets under administration, over in a report, which discusses the mac- main alert to potential new inflation
210,000 policies, and would have writ- roeconomic factors that are driving shocks such as those caused by geopo-
growth in the non-life insurance and
ten £6.4 billion of new business. litical conflicts that disrupt global sup-
life insurance sectors.
Following the deal, Lombard Interna- ply chains and rekindle claims inflation.
tional will continue to operate from Non-life premiums grew by 3.9% in real In addition, social inflation has been a
Luxembourg, offering its current suite terms in 2023, up from 0.8% in 2022 – key concern for liability insurers in the
of products, which will be distributed an improvement primarily driven by US since 2015, and there are signs that
under the Utmost brand by a single rate hardening, said Swiss Re’s sigma social inflation also is affecting the
combined global salesforce. This ar- report, titled “World insurance: Australian market, the report said.
rangement will maintain the existing strengthening global resilience with a
new lease of life.”
distribution models of the combined Join
group. The report noted that rate increases
in personal lines have exceeded those Online Certificate
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tunities for efficiencies and capital syn- ning to ease after years of hard mar-
ergies. Utmost noted that it will focus ket conditions. Marine Insurance
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18 August 2024 The Insurance Times