The insurance groups are experiencing tailwinds at the moment, which is actually doubly good for their shareholders: firstly, because rapid growth in profits generally has a positive impact on share prices and secondly, because dividends are then even more generous. Although the Munich Re share has appreciated sharply this year, the dividend yield currently remains at a respectable 3.6%. The yield for its competitor Hannover Re is 3.1%, still above the average when compared with the market as a whole. Looking at the whole sector as measured by the STOXX Europe 600 Insurance Index, the jump in yields is particularly stark. The industry barometer reveals an average dividend yield of 4.9% compared with 2.7% for the broad-based STOXX Europe 600 Index.<\/p>\n
That the earnings and dividend outlooks remain positive is due in part to higher prices. In light of the recent jumps in inflation allied to high losses from catastrophes, Munich Re, for instance, is seeking to turn the price screw significantly at the start of the year. At the \u201cRendezvous de Septembre\u201d industry meeting in Monte Carlo, both Hannover Re and Munich Re, along with Swiss Re, called for higher prices for new contracts concluded from 1 January 2023. The experts at Standard & Poor's anticipate a price increase in the middle single-digit percentage range for the year ahead. According to assessments by Bain & Company, the premium income of insurers will continue rising in the medium term. In their analysis, the management consultants reckon that premiums in global insurance business will climb to USDtn 10 by 2030. This means they are increasing by around 80% in the current decade, roughly twice as fast as in the 2010s. One of the reasons given by the experts is that risks will accumulate in the future, with only 5% of cyber risks globally, for instance, being protected by policies.<\/p>\n
The AST Re-Insurance Index allows direct and focused participation in the insurance industry\u2019s prospects of success. It is an actively managed benchmark that always seeks to keep track with the latest changes in the markets. \u201cWe have bundled what our internal research suggests are the most promising reinsurers and primary insurers in a basket in which we are committed as the lead investor,\u201d explains co-CEO Martin Raab of Asset Security Trust (AST). The industry insider cites as the dominant motivation for developing the index the unanimous feedback received at this year\u2019s Monte Carlo meeting, the low pricing of risks and the successive uptick in premiums. \u201cNatural disasters such as Hurricane Ian indicate that premiums will likely continue to rise across the board, leading to increased earnings for reinsurers,\u201d Raab is convinced. While the prospects for the industry are expected to remain positive, however, there will be some volatility as well. \u201cAny deviation from risk models caused by unforeseen influences can put significant dampers on the share prices of reinsurers and primary insurers,\u201d the expert warns, adding: \u201cThat makes it important to keep an eye on balance sheet quality at all times and be aware of the risks.\u201d<\/p>\n
Anyone wishing to tap into AST\u2019s know-how can do so through the tracker certificate on the AST Re-Insurance Index, which is listed on the SIX Swiss Exchange (ISIN CH1171792851). \u201cThe tracker\u2019s pure play approach with a focus on reinsurers can serve as an attractive addition to a portfolio,\u201d says Michael Däppen, co-CEO of AST, citing a practical consideration. \u201cSo far this has paid off,\u201d adds Däppen, an investment expert. Only fixed at USD 100 on 10 October 2022, the product already has a considerable track record: the certificate has climbed 19% in the last two months alone, beating the MSCI World by around 7 percentage points. The servicing of a portfolio actively managed by professionals does not come free, of course, but the costs are within a manageable range. The management fee is 0.75% p.a., while another 0.30% p.a. is charged for calculating the index and 0.10% is levied for every component adjustment within the barometer.<\/p>\n
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11<\/a>, email info@leonteq.com<\/a> or contact us here<\/a>.\n<\/p>\n <\/div>","url":"reinsurance","investmentThemeVerticalImageUrl":"https://structuredproducts-ch-pub-uat.leonteq.com/product-news/sidenav-banner/underwriting_leonteq-structured-products_sidenav+banner.jpg","thumbnailUrl":"https://structuredproducts-ch-pub-uat.leonteq.com/product-news/thumbnail/underwriting_leonteq-structured-products_thumbnail.jpg"}