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Few industries have a more “old world” vibe than European insurance companies. The average age of the 10 largest listed players on the continent is almost 170. But quietly, these old people are gaining market profits that jealously tech startups.
The STOXX 600 Insurance Subindex, which tracks 30 large insurance groups in Europe, rose 15% in the first half of 2025, the highest six months since 2019. Performance is not flashing in pan.
Growth fought hard. It took almost 25 years to recover from the record highs set in the second half of 2000. But profits have been taken away in recent weeks as they have been profitable.
Like banks, insurance companies have benefited from higher interest rates since 2022, increasing the revenue they earn from bond-heavy portfolios. Bumper’s government spending plans have raised yields for most of the continent this year, even as central bank rates fall.
The sector also benefits from broader interest in Europe in response to unpredictable US trade policies. The relatively stable cash flow of insurance companies looks particularly appealing in these unstable times. Andy Briggs, CEO of London-listed Phoenix Group, told Financial Times’ Global Insurance Summit last month that the company is attracting more attention from US investors.
However, stocks are no longer cheap. According to Bloomberg, the STOXX Insurance Index is trading at an estimated revenue of 12.3 times over the next 12 months, well above the long-term average of 10.5 times. At the price of reservation, the index is the most expensive in over 20 years.
The Swiss group has additional challenges as it led the central bank last month to bring its benchmark rate back to zero. Swiss Re and Zurich are the worst performance of insurance indexes so far.
However, there are several reasons why we remain optimistic about the outlook for these dinosaurs. The surge in inflation in 2022 has been particularly painful for non-life insurance companies, but the growing belief among economists that inflation will settle at a higher level than before is that it continues to cause bond yields – good for insurers’ investments. In fact, KBW analysts consider it to be the most positive macro environment of their generation.
Aviva’s £3.7 billion direct line acquisition – completed this week has further fueled speculation about the possibility of a M&A after more than 20 years of prudence. The largest Allianz aims to grow revenue per share by up to 9%, compared to about 6% for most of the past decade. It’s hardly at the nvidia level, but it suggests that these old bones still have life.
nicholas.megaw@ft.com
