European Insurance Giants See Share Prices Swoon From COVID-19

The stock prices of Europe’s big commercial insurers are taking it on the chin as claims mount amid the coronavirus pandemic.

The EURO STOXX Insurance Index is down more than 21 percent as of Monday morning (Aug. 17) year to date, compared to 11.2 percent for the broader STOXX Europe 600 index.

The share losses by Europe’s top insurers come amid a jump in claims from the businesses for which they provide coverage, as firms have been forced to cancel events and suffered hits to their bottom lines, The Wall Street Journal reported.

The insurers have also seen their own investment portfolios take a hit amid stock market volatility, as their solvency ratios – a key measure of their financial strength – are also falling, the Journal reports.

Stock price volatility is also up dramatically for Europe’s largest insurers, with annualized volatility hitting 48.3 percent for the year to date as of the end of July, according to the EURO STOXX Insurance Index. That compares to a three-year average of 24.4 percent.

European insurance stocks have also faced higher volatility than other European companies, with annualized volatility on the Euro STOXX index hitting 36.4 percent, up from a three-year average of 19.5 percent.

The EURO STOXX Insurance Index is made up of 10 companies, with the stock price of German insurer Allianz SE making it the leading carrier on the weighted average, at just over 34 percent.

Still, for some European insurers, the main hit has come through falling sales of new policies, rather than claims.

Prudential, a British insurer, said lockdown measures by governments across the world had “impacted sales levels and new business profitability,” the Journal reported. With Hong Kong leading the way down, Prudential reported a 35 percent drop in Asian insurance sales.

Even so, not all insurers have been equally affected, with balance sheets remaining strong at property and casualty insurers, according to the WSJ, citing analysts at UBS.