From April 2, 2025—“Liberation Day,” when the US announced sweeping tariffs on European imports—through to the market close on April 9, European insurance stocks declined by 11%, broadly in line with the wider equity market.
The move reflected wider investor unease around escalating trade tensions rather than any direct, material exposure to the tariffs themselves. Behind the headlines, however, the sector’s stability stood out.
According to Autonomous Research, a financial services-focused research and consulting firm, the industry’s strong capital positions and well-managed risk exposures played a key role.
In its recent report, Autonomous provides a comprehensive solvency review of major European insurers, measuring their capacity to absorb shocks under a range of severe but plausible stress scenarios.
The analysis found that, despite the market correction, sector-wide solvency coverage dipped only marginally—from 220% at the start of the year to 219% by April 8.
The modest decline underscores how firms’ robust operating surplus generation (+7 percentage points) helped offset the impact of capital market losses (–4pts) and capital returns (–3pts). Overall, insurers entered the volatility with a collective solvency buffer of €139bn—around 20% of total market cap—well above regulatory thresholds.
The report shows that re/insurers like Munich Re, Hannover Re, and Vienna Insurance Group are particularly well-capitalised, with solvency ratios exceeding internal targets.
On the other end of the spectrum, Tryg, Mapfre, and PZU were more exposed to the April downturn and sit closer to the lower end of their comfort zones. Meanwhile, Swiss-regulated firms including Zurich and Swiss Re, governed under the Swiss Solvency Test (SST), continue to demonstrate stronger capital positions and lower sensitivity to equity and credit spread shocks.
Autonomous ran a series of market stress simulations, including a 100bps fall in risk-free rates across the Eurozone, UK, and US, a 20% drop in equity markets, 150bps and 300bps widening in investment-grade and high-yield bond spreads respectively, and credit defaults consistent with the 2008–09 crisis.
It also assumed a 20% migration of credit assets down by three notches (e.g. A to BBB). These shocks produced a sector-wide solvency decline of 31pts—less severe than the 36pt drop during COVID but still meaningful.
Among those hit hardest in the stress scenario were Baloise, Swiss Life, and Vienna, where solvency coverage fell significantly.
By contrast, firms like Zurich and Munich Re remained resilient, aided by diversified portfolios and disciplined capital deployment. The report highlights the importance of operating free surplus generation as a buffer—firms like Ageas, Aegon, and Munich Re were standouts, while others such as AXA and Generali saw more pressure due to ongoing capital distributions.
Looking forward, Autonomous flags potential challenges for insurers like Legal & General and PZU, which could struggle to rebuild capital after a downturn. In contrast, firms like M&G, Ageas, and SCOR demonstrated higher net retention and flexibility in capital planning.
While the US tariffs marked a jolt to investor sentiment, Autonomous’s analysis shows that most large European insurers remain fundamentally well-positioned.
The findings reinforce the importance of strong internal capital generation, measured payout policies, and ongoing scenario testing in a market environment that remains highly reactive to macroeconomic shocks.
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