Swiss insurers well on their way

Zurich, 28 January 2011 – Swiss private insurers are in good shape and should post good to very good operating results. Insurers have continued making great efforts to improve their core busi-ness, increase profitability, refine risk management and strengthen capital bases. Furthermore, the claims burden should be below the average of the past few years, which will have a positive impact on insurance companies’ income statements.

Slight growth in non-life insurance

Non-life premiums again saw slightly positive growth in 2010, enjoying a 0.4% rise across all companies and business lines. But this growth was below the average of the past few years, a sure sign of intensifying competition in a largely saturated market.

Motor vehicle insurance premiums were also up 0.4%, while accident insurance posted a growth of 2.9%.

Life insurance defies difficult environment

Despite extremely difficult market conditions with record-low interest rates and continuing uncertainties on the financial markets, the Swiss group and individual life insurance segment achieved premiums totalling almost CHF 30 billion in 2010 – up around 1.4% on 2009.

In group life insurance the premium volume grew by 4.2% in 2010, so that Swiss life insurers achieved the highest growth rate of the past eight years in this business line. The full insurance model offered by life insurers gives SMEs the necessary reassurance, even in times of serious and sustained turmoil on the financial markets, of not ever being asked to contribute to the re-capitalisation of underfunded pension plans.

The premium volume in individual life insurance is likely to have contracted by some 4.5% in the past year. However, the fairly strong premium growth of 7.5% witnessed in 2009 somewhat puts the decline in 2010 into perspective. But single premiums in individual life insurance fell sharply, down 9.8%. It is precisely in times of persistently low interest rates that the harmful effect of stamp duty on this type of retirement provision becomes clear: A levy of 2.5% of single premiums considerably inhibits demand for such products.

There is a continuing trend away from traditional endowment insurance towards unit-linked life insurance. In individual life insurance business, unit-linked insurance policies now account for over 35% of the total premium volume. The premium volume was up 8.2% for unit-linked life in-surance policies with individual premiums and up 3.2% for unit-linked life insurance policies with periodic premiums.

Low combined ratios

Major loss events such as natural disasters held off in 2010. The combined ratio is generally likely to be well below 100%, in some cases even well below 90%. Insurance companies are profitable in their core business and do not need to subsidise it with investment income – which would not at the moment be that easy given the prudent investment policy currently pursued by insurers. They can, for example, use any profits from investments to strengthen their balance sheets.

So Swiss private insurers are well on their way and can look to the new year with confidence.

Documents

• Review of the Year 2010 (<1MB)
• «Facts and Figures 2011» brochure (<1MB)

Link

• Order the «Facts and Figures 2011» brochure