Insurance

The insurance sector provides financial protection against unforeseen events by transferring risk from individuals or businesses to an insurer in exchange for a premium. Insurers generate revenue by collecting these premiums and investing them in revenue-generating assets, while also diversifying risk by pooling it across many policyholders.

$7-$10 trillion is the total premium market and $24- $40 trillion is the AUM (different data sources have different numbers). Total GDP global is ~ 105 trillion and market cap is ~130 trillion.

As per one report, total assets of $42 trillion, and liabilities of $36 trillion.  (The report covers 90% of the global markets or global Gross Written premiums (GWPs))

The assets are held as corporate debt, soverign debt mostly, equities upto 10% (Should we then assume that Insurance companies own 4 trillion of global equities? or ~4%?? Is it not more?)

AE = Advanced Economies. EMDC = Emerging Markets and Developing Economies

As to GWP, total is ~$7 trillion, US accounts for 40% of this GWP.

Solvency Ratio

A solvency ratio examines a firm's ability to meet its long-term debts and obligations.

An insurance firm's solvency ratio is typically calculated by dividing its eligible own funds (assets) by its Solvency Capital Requirement (SCR), a regulatory benchmark for capital adequacy, with the formula being (Eligible Own Funds / Solvency Capital Requirement) x 100%. A ratio above 100% indicates compliance with regulatory requirements, while a higher ratio signals a stronger balance sheet and a greater ability to absorb losses, protecting policyholders and ensuring ongoing operations. 

Solvency ratio = (Eligible capital / Required capital)

It is interesting to note the significant difference in Solvency ratios in Life Insurance firms in Americas vs EMDE.  (Why? The life expectancy of insured pool?? Perhaps part of it can be explained by the time duration, the longer time the advanced economies have been building the reserves, which developing are still working at)

Positive influences on life insurers’ solvency ratios included - a) strong capital reserves, b) effective risk management and c) favourable global financial market conditions, while negative factors were a) interest rate fluctuations in some regions, b) longevity risk and c) challenges in ALM. 

Positive factors affecting the solvency ratios of non-life insurers included a) strong underwriting performance and b) robust investment income. Conversely, a) adverse claims in some segments, b) significant catastrophe events and c) unfavourable reinsurance arrangements (high premiums paid to the reinsurer, and low coverage by the reinsurer) were negative drivers.

Who are the world’s leading insurers?

Unsurprisingly, in terms of market capitalization, the global insurance market was led by U.S.-based insurers. Premiums written describe the total amount customers pay for insurance coverage and are an insurer’s main source of revenue. In 2024, U.S. insurer, Berkshire Hathaway, generated the highest revenue worldwide, reaching well over 350 billion U.S. dollars. (Although premiums written is $43 billion) Two Chinese companies, Ping An Insurance and China Life Insurance, rounded out the top three insurers. As threats continue to prevail across the globe, the insurance sector is met with both opportunities for continued growth and the responsibility for providing a safety net for countless individuals and organizations across the world. 

The global insurance market was worth roughly eight trillion U.S. dollars in 2024, but this looks set to increase substantially in the coming years.

A few pointers from following - life is 40%, but it is interesting to note this mix in US compared to other countries. In US, life premiums are $700 billion to non life of $2.5 trillion, most othe markets, life is the main market. (US has a lot of liabilitiy insurance as well - a litgiuous market, private healthcare insurance, large insurable asset base) - It is significantly of a different shape than the rest of the world.

For example, a company United Health Care -s a diversified health care company is the largest insurer by premiums written. ($309 billion premiums written - 2024)

Another interesting chart - esp the mix between life insurance and health insurance over time. And North America leads the world in P&C and Health Insurance.

https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/economic-research/publications/specials/en/2025/may/2025-05-27-global-insurance-report.pdf

The reason Allianz figures in the top asset managers is because they manage not just their own but other investors' AUM too.