Europe's globally leading insurance groups managed to protect earnings and capital from the challenges linked to high inflation and rising interest rates in 2022, Fitch Ratings said in a new report.

The ‘Peer Comparison: Allianz, AXA and Zurich' report provided insight into recent developments at the three insurance groups.

Allianz SE (Insurer Financial Strength rating: AA/Stable), Axa SA (AA-/Positive) and Zurich Insurance Company Ltd. (AA/Stable) "demonstrated strong pricing power thanks to dominant market positions and limited exposure to interest rate risk due to very strong asset-liability management".

The report highlighted how elevated inflation and tightening monetary policy had continued into 2023 as the failures of several banks in the US and Switzerland added to the nervousness in financial markets.

"Nevertheless, Fitch expects that the three insurance groups will maintain profitability and capital adequacy on similar levels as in 2022.

"Very strong company profiles with dominant market shares and high diversification benefits as well as conservative reserving and rigorous risk management help to offset headwinds from the macroeconomic environment. "

Inflation negatively affected the retail motor business of the three insurance groups, in particular, as spare part prices increased significantly and claims frequency increased, Fitch further said.

New business volumes in life insurance suffered from intensified competition from banks and lower savings rates of private households. Investment income and IFRS shareholders' capital declined in response to fair value adjustments on the insurers' bond portfolios.

Significant price adjustments in non-life, business mix shifts in life and a moderate positive correlation of solvency ratios to interest rates mitigated the effects of the challenging macroeconomic environment.