Stock market, insurance, reinsurance: well regulated

Published on 27 Dec 2022 at 19:24Updated 27 Dec. 2022 at 19:27

There are differences in views that bring us closer together. Insurance companies are inexhaustible on real world risks, their job is to market coverage. Their shareholders seem to be mainly concerned with the vagaries of the financial world.

And as much as the sector had suffered on the stock market during the financial storm of 2008 – due to concerns about the value of the securities in the portfolio – so much the wave of climatic disasters did not tarnish its brand image, enhanced by the increase in interest rates and the promised discipline in the use of free cash flow.

In Europe, the performance of the insurance and reinsurance index has beaten its Stoxx 600 benchmark since the start of 2022 (+6.7% vs. -9.1%). Only energy and natural resources fared better. The lead since the end of 2019 has been reinforced (+17% against +12%), as if the pandemic gap had been well forgotten.

It may well be that the investors are not aware enough of the capital costs or the growth potential of the insurable material. But for the immediate future, these better-served companies are dividend providers, barring exceptions. And in any case, they try not to put them all in the same bag.

Among reinsurers, the three-year increase in Munich Re (+33%) contrasts with the decline for Scor (-32%). Among insurers, Zurich Insurance’s brilliant run (+33%) is enough to make Prudential pale (-19%). Its boss Mario Greco also fears the cyber risk more than the climate.

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