Totals assets rise by 2% over past year as most broad asset classes gain. Solvency ratios improve for life insurers and remain high across all sectors – typically 2-3 times the level required by regulations. Risk margins have reduced significantly reflecting the changes brought about through Solvency UK reforms. Net claims outstrip net premium growth to place downward pressure on profits.
Broadstone has published their third annual report analysing the Solvency and Financial Condition Reports (SFCRs) of mutuals and other insurers of a similar nature and size.
In total, 29 insurers are included in the analysis with combined assets of £29bn, a figure that has risen by 2% over the year, with most broad asset classes seeing positive returns.
Risk margins reduced by £100m through 2023 owing to the Solvency UK reforms effective at the 2023 year-end. Consequently, the vast majority of insurers (primarily in the life sector) report increases in own funds.
Across the group of 29, the SCR increased by 7% (with marginally higher increases in the non-life sector).
With higher increases in own funds relative to the SCR, solvency ratios increased for life insurers. Solvency ratios remain high across all sectors – typically 2-3 times the level required by regulations.
On average, all types of insurers saw increases in net claims incurred. This outstripped any increases in net written premiums, which combined with increasing expense ratios, suggests some downwards pressure on operating profits.
David Gray, Senior Consultant Actuary at Broadstone, said: “We are pleased to publish our third report on solvency disclosures in the mutual sector. This analysis increases our understanding of the market and enables comparisons across a large number of reported metrics. The aggregate figures are useful for broad movements over the year and there is further interest in the extent of variations between individual insurers.
“Annual movements can fluctuate and it is important to note insurers (and their policyholders) are subject to wider pressures – such as cost of living, health service capabilities and government economic policy. Given the cost of living crisis, the relatively little decrease in gross premiums for life insurers can be viewed reasonably positively.
“Mutuals play a vital role in our financial services ecosystem, providing customer-centric access to a greater range of insurance products often at more affordable rates.
“The publication of a third report may allow us to develop our analysis beyond annual movements and look at trends across a longer period.”
A full copy of the report can be accessed here
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