The world's top 50 property and casualty companies increased their collective premiums by nearly 9% year over year in 2023 against a backdrop of rising prices for insurance and reinsurance coverage.

The group's gross premiums earned, or insurance service revenues for IFRS 17 reporters, increased to a little less than $1.50 trillion in 2023 from $1.37 trillion in 2022, according to analysis by S&P Global Market Intelligence. Only one company in the top 50, Canada's Intact Financial Corp., reported a decline in insurance service revenues.

US personal lines powerhouse State Farm Mutual Automobile Insurance Co. topped the ranking, with $87.59 billion of direct premiums earned last year. The insurer held the same position in the prior year's ranking. State Farm was also the third-fastest growing company in the top 50 in 2023, with an increase in direct premiums earned of 18.3%.

The fastest-growing company in the group was Bermuda-based specialty insurer and reinsurer Arch Capital Group Ltd. Its gross premium earned rose 23.1% year on year to $17.02 billion in 2023 from $13.83 billion in 2022.

Reinsurance growth

Arch's reinsurance business was a big contributor to its overall growth. The segment's net premiums earned rose 47.4% year on year to $5.84 billion. The company, which ranked 32nd in this analysis, in its 2023 annual statement credited improved market conditions and competitors reducing their capacity for the reinsurance growth. Arch's insurance segment boosted net written premiums 19.4% to $5.45 billion.

The global reinsurance market underwent a big shift in prices and terms last year, beginning at the Jan. 1 renewals. Reinsurers raised prices for property catastrophe cover and raised the thresholds at which coverage pays out, known as the attachment point, to cut their exposure to smaller, more frequent natural catastrophes such as fires, floods and thunderstorms, leaving more of those bills to primary insurers. Prices have increased because of heightened risk perception and high inflation levels, which have elevated property values.

Reinsurance also played a large role in pushing up premiums at French mutual Groupe Covéa, which was a close second to Arch in terms of overall growth, with a 19.4% year-on-year increase in gross premiums earned. Reinsurance makes up 37% of Covéa's book of business. It owns Bermuda-based reinsurer PartnerRe, the world's 10th largest reinsurer according to S&P Global Ratings' 2024 ranking.

Covéa's insurance gross earned premium was almost flat year on year at €16.91 billion in 2023, according to the group's annual report, while reinsurance gross earned premiums were up 69.3% to €9.86 billion. Part of the reason is that Covéa's 2022 figures only include PartnerRe from July 12, the date Covéa completed its acquisition of the reinsurer. However, PartnerRe's own figures show that its non-life net premiums earned were up 4%.

Companies are ranked by 2023 property and casualty gross premiums earned or insurance service revenues where available. Property and casualty gross premiums written, net premiums written, net premiums earned, or statutory direct premiums written are used respectively when a company did not report gross premiums earned.

The methodology has changed from the previous year's top 50, where the key metric was gross premiums written, to factor in the introduction of the IFRS 17 accounting regime in several countries. Gross premiums earned is more comparable with IFRS 17's insurance service revenues.

Premiums are converted to US dollars at the average currency exchange rate for each respective fiscal year. Analysis is a best-efforts basis limited to public insurance companies around the world and nonpublic insurance companies in North America and Europe.

Personal lines pressure

Higher prices and attachment points for property-catastrophe cover may be good news for reinsurers, but they also have left primary insurers with more to pay out on their own. Insurers must also cope with claims inflation in auto insurance, thanks to inflation and increasing vehicle complexity boosting repair costs, as well as high bodily injury awards in some countries.

Those in the top 50 with the highest loss ratios, which show claims payouts as a percentage of premiums, are predominantly personal lines insurers. Aéma Groupe, a group of French mutual insurers, reported the highest loss ratio of 86.2%, closely followed by a clutch of US personal lines writers, including State Farm, which reported the second-highest loss ratio of 85.8%.

State Farm said it had suffered underwriting losses in 2023 "due to continued elevated claims severity and significant catastrophe activity," in both auto and homeowners business.

US personal lines insurers have implemented double-digit price increases both in auto and homeowners insurance to tackle the challenging conditions. Better underwriting performance could be on the way for the industry overall. S&P Global Market Intelligence's 2024 US P&C Market Report predicts that the industry will return to underwriting profitability in 2024 with a combined ratio of 99.2% after 2023's loss-making ratio of 102.6%.

Insurers may also be encouraged by the fact that property-catastrophe reinsurance prices started to moderate in 2024. Reinsurance broker Howden Re, for example, reported that its property-catastrophe reinsurance rate-on-line index, based on premiums as a percentage of coverage, fell 5% at the June 1 renewals.

Though prices may be up for negotiation, reinsurers are unlikely to give any ground on attachment points at the upcoming Jan. 1 renewals, when roughly half the world's reinsurance coverage renews.