Insurance Value Creators Report (Boston Consulting Group)

Summary

• The average total shareholder return of publicly held insurers was –5% in 2020, versus a 15% average across industries.§1
• Average annual TSR was 5.1% from 2016 through 2020, 3 percentage points lower than in the previous five-year period.§2
• Reinsurers' average five-year TSR fell to 4.9% from almost 15%.§2
• Top-quartile insurers delivered TSRs roughly triple the 6% industry median.§3
• The gap between top- and bottom-quartile TSR was 22 percentage points in Asia-Pacific, 19 in the Americas and 13 in Europe.§3
• RoE of 9.6% over the past five years is below the estimated cost of equity of between 9% and 11%.§4
• Progressive ranks first with a five-year TSR of 29%, and Zurich follows with 18%.§5

Key insights

1. Insurance ranked near the bottom of the 33 sectors tracked by BCG.§1
2. Multiline insurance TSR fell more than 5 percentage points to 3.6%.§2
3. There were more than 75 named storms in the US alone in 2020.§2
4. In Asia-Pacific, tangible book value growth accounted for more than 90% of top-quartile TSR performance.§3
5. Multiple expansion accounted for about a tenth of the TSR of Europe's top-performing insurers.§3
6. P&C insurers remained the best overall on return on tangible equity but had the greatest company-to-company variance.§4
7. Four successful archetypes emerge among top performers, including the data analytics standard-bearer and the diversified cash generator.§5
8. The Net-Zero Insurance Alliance was formed by AXA, Allianz, Aviva, Munich Re, SCOR, Swiss Re, and Zurich.§7