Divergent growth
Divergent growth trends caused financial market performance to vary by region
Five macro trends that are driving our market
Diverging economic growth
While fiscal stimulus boosted US real GDP growth in 2018, growth slowed in many other economies.
2.9%
(Estimated real GDP growth in the US, 2018, source: Swiss Re Institute)
Monetary policy normalisation
The US Fed increased rates four times in 2018, while the ECB stopped its asset purchases by year-end.
2.25–2.5%
(Target range for the US federal funds rate, year-end 2018, source: Bloomberg)
Large catastrophic losses
2018 was again a catastrophe-prone year with estimated insured losses of USD 81 billion – considerably below USD 150 billion reported in 2017, but still one of the worst-affected years.
USD 81bn
(Insured catastrophic losses, nat cat and man-made, source: Swiss Re Institute, preliminary estimate)
Rising trade tensions
There has been a considerable increase in tariffs in 2018, particularly on US-China trade. Further escalation to global trade war is a key risk.
+60%
(Increase in number of harmful trade interventions, 2018 versus 2017, source: Global Trade Alert)
Soft market/low non-life profitability
Soft market conditions and high catastrophic losses led to a significant decline in overall profitability.
6–7% ROE
(Average profitability of eight major non-life markets in 2018, source: Swiss Re Institute, preliminary estimate)
Trends in our four main markets
Primary non-life
In 2018, premiums have risen moderately in almost all regions due to stronger economic growth. Global non-life premiums were up an estimated 3% in real terms, after a 3% gain in 2017. The global aggregate is being driven by emerging markets, where we estimate 8% premium growth in 2018.
2 400 (USD billions)
Estimated global premium income in 2018
3%
Estimated global premium growth in 2018
Reinsurance non-life
Global premiums in non-life reinsurance are estimated to have grown by around 5% in 2018 in real terms, mainly based on rapidly increasing cessions from emerging markets. The impact from natural catastrophe losses is less severe after last year’s record USD 144 billion in global insured disaster-related losses. However, claims were mounting up and are estimated at above USD 70 billion for the re/insurance industry. The largest natural catastrophe losses were from wildfires in California, hurricanes making landfall in the US (Michael, Florence), and from typhoons and floods in Japan.
180 (USD billions)
Estimated global premium income in 2018
5%
Estimated global premium growth in 2018
Primary life
In 2018, global primary life insurance premiums are estimated to have risen by about 2% in real terms, slightly slower than the average annual growth of the past five years. Premiums in mature markets expanded by almost 2%, driven by Japan and the US, while European markets were mainly sluggish. Emerging markets, which have accounted for most of the acceleration in global life premiums income, contributed much less in 2018, particularly due to China, given its enormous impact in the emerging market aggregate.
2 900 (USD billions)
Estimated global premium income in 2018
2%
Estimated global premium growth in 2018
Reinsurance life & health
The life reinsurance industry registered a 2% increase in 2018. Underlying reinsurance premium growth in traditional reinsurance areas like mortality and morbidity risk has again remained relatively subdued, but other kinds of reinsurance transactions were also sluggish this year. In mature markets, slow increases in the US were contrasted by healthy growth in Europe and Asia-Pacific. Growth in emerging markets was significantly impacted by the decline in cessions in China of around 10%, offsetting expanding reinsurance demand from other regions.
75 (USD billions)
Estimated global premium income in 2018
2%
Estimated global premium growth in 2018