Insurance Companies: How They Work, Top Players, and Investment Perspectives

How Insurance Companies Operate and Make Money

Insurance companies have a unique business model that relies on both underwriting (collecting premiums and paying claims) and investment income. In simple terms, an insurer collects premiums from policyholders for coverage of certain risks. Not all of those premiums are immediately needed to pay claims – there is a time lag between collecting premiums and paying out claims. The pool of accumulated premium funds not yet paid out in claims is known as the “float.” Insurers invest this float to earn returns. In fact, insurance companies make money by investing their float – for most insurers, premiums roughly match payouts over time, so their profit largely comes from investment income on the float[1]. This is why investment earnings are crucial – for many major insurers (both life and non-life), investment income is the second-largest source of revenue after premiums[2].
Underwriting itself may be marginally profitable or even run at a slight loss for the sake of growth, but if the insurer’s investment returns on the float are strong, the company can still be very profitable. A key measure of underwriting performance is the combined ratio, which is the sum of an insurer’s loss ratio and expense ratio (basically, claims paid plus operating expenses, divided by premiums earned). A combined ratio below 100% indicates an underwriting profit (paying out less in claims/expenses than received in premiums), while a ratio above 100% means underwriting operations had a loss[3][4]. Even when the combined ratio is over 100 (an underwriting loss), insurers can remain profitable overall if their investment income on the float makes up the difference[5]. Many insurers focus on keeping the combined ratio as low as possible because it reflects disciplined risk pricing and cost control – a combined ratio under 100% essentially means the insurer is profiting from underwriting alone, without even counting investment income[3].
It’s important to distinguish different categories of insurance because the business dynamics vary:

• Property & Casualty (P&C) Insurance: Covers property damage and liability (e.g. auto, home, commercial liability). These policies are usually short-term (often 6-12 months). The main risk is underwriting and catastrophe risk – the chance that premium collected is not sufficient to cover claims, especially in events like hurricanes or earthquakes. P&C insurers rely on tools like reinsurance (insurance purchased by insurers) to manage large losses. The time horizon for P&C policies is relatively short (claims are settled within a few years), and performance is heavily measured by the combined ratio[6][7]. Strong P&C insurers aim for combined ratios well under 100% to ensure their underwriting is profitable[3].
• Life Insurance: Covers the risk of death or provides savings/investment products (endowments, annuities). Policies are long-term (often spanning decades). Life insurers collect premiums and often must hold substantial reserves to pay future benefits. Investment income is especially critical for life insurers, as premiums are often invested for many years. In fact, one analysis noted that in 2017 about 29% of U.S. life insurers’ total income came from investments (versus ~62% from premiums)[8] – the investment “spread” (earning a higher return on investments than the rate promised to policyholders) is a major source of profit[8]. The key risks in life insurance are mortality/longevity risk (actual death rates versus expectations) and interest rate risk (since insurers need to invest premiums to meet long-term guarantees). Life insurers manage these by product design and asset-liability matching – ensuring that the duration of investments matches the timing of policy payouts[9]. When interest rates are low, life insurers’ investment spreads can shrink, hurting profits; conversely, rising interest rates in recent times have improved life insurers’ profitability by boosting bond yields[10].
• Health Insurance: Provides medical coverage. In some markets (like the U.S.), health insurers operate on a shorter cycle similar to P&C, focusing on annual medical cost trends. They make money by managing healthcare expenses relative to premiums (medical loss ratio) and often have lower investment float duration (since medical claims are paid quickly). Notably, several of the world’s largest “insurance” companies by premium are health insurers (as we’ll see), which operate more as managed care organizations. Investors evaluate them on metrics like medical cost ratios and membership growth rather than combined ratio.
• Reinsurance: Reinsurers (like Swiss Re or Munich Re) insure other insurance companies. They take on portions of risk from primary insurers, often for catastrophe coverage or large portfolios. Reinsurance helps spread risk globally. Reinsurers must be experts in risk modeling and diversification, as a single event can trigger claims from many ceding insurers. Their business is highly cyclical and volatile – a few bad catastrophe years can push combined ratios over 100, so they accumulate capital in good years to pay out in bad years. From an investment perspective, reinsurers are often valued below book value if investors fear big loss events, but they can outperform when pricing (premiums) is high after major events (the so-called hard market cycle).
  Regulation and capital are also key to how insurance companies work. Insurers must hold adequate capital reserves to remain solvent under worst-case scenarios. Metrics like the EU’s Solvency II ratio or the NAIC’s Risk-Based Capital are closely watched. These requirements mean insurers can’t leverage themselves too much – they are generally lower-return but steady businesses when managed well. Warren Buffett famously loves insurance companies for their float: as long as an insurer can underwrite at at least a break-even (combined ratio ~100% or less), the float essentially becomes a cost-free source of investment funds for the company[11]. Buffett notes that an insurance business is valuable if the cost of its float (underwriting loss) is lower than the cost of alternative funding – but if an insurer consistently underwrites at a loss worse than the cost of debt, it’s a “lemon”[11]. Thus, prudent underwriting is crucial.

Top 10 Insurance Companies in the World (Global Leaders)

The global insurance industry is dominated by a mix of large insurance groups, including diversified insurers spanning life and P&C, specialized life insurers, property-casualty specialists, and health insurance giants. Below are the top 10 insurance companies in the world, ranked by recent (2023) total premiums written, along with their primary business focus:

1. UnitedHealth Group (US) – The largest insurance company in the world by premiums. UnitedHealth is primarily a health insurance and managed care provider, collecting about $291 billion in net premiums in 2023[12]. It operates through health benefits (UnitedHealthcare) and health services (Optum) divisions. Its dominance reflects the scale of the U.S. health insurance market.
2. Centene Corporation (US) – A major health insurer focused on government-sponsored healthcare programs (Medicaid and Medicare). Centene wrote about $149.5 billion in premiums in 2023[12], making it the second-largest globally. Its business model centers on providing managed healthcare plans for public programs.
3. Elevance Health, Inc. (US) – Formerly known as Anthem, Elevance is one of the largest U.S. health insurers, operating Blue Cross/Blue Shield plans in multiple states. It had roughly $142.9 billion in premiums in 2023[12]. Like others above, its scale comes from serving tens of millions of health plan members.
4. Kaiser Foundation Health Plans (US) – A group of nonprofit health insurance plans (often known simply as “Kaiser Permanente” in conjunction with its hospitals). Kaiser’s health plans took in about $114.2 billion in premiums[13]. Kaiser is an integrated insurer-provider model, owning hospitals and clinics as well as the insurance function.
5. China Life Insurance (China) – The largest life insurer in China and one of the biggest globally. China Life wrote about $107.9 billion in premiums in 2023[14]. It focuses on life insurance, annuities, and accident & health policies. As a state-run insurance group, it has a dominant market share in China’s life insurance sector.
6. Humana Inc. (US) – Another U.S. health insurance leader, specializing in Medicare Advantage plans for seniors. Humana had about $101.3 billion in premiums in 2023[14]. Its core business is health coverage, including offering various health plans and coordinating care for its members.
7. State Farm (US) – The world’s largest property & casualty insurer by premium. State Farm is a mutual insurance company known primarily for auto and homeowners insurance in the US. It wrote about $92.6 billion in premiums in 2023[15]. Unlike the firms above, State Farm’s business is classic P&C insurance – it’s the #1 auto insurer in the U.S. – and it operates as a policyholder-owned mutual company.
8. Allianz SE (Germany) – Europe’s largest insurance group and a global giant with a diversified portfolio. Allianz’s premium volume was about $90.2 billion in 2023[16]. It offers multi-line insurance (property, casualty, life, health) and also has a huge asset management arm (managing over €2 trillion, including through Pimco). Allianz is known for its financial strength and broad international presence.
9. Berkshire Hathaway (US) – While not a traditional standalone insurance company, Warren Buffett’s conglomerate includes massive insurance operations (GEICO auto insurance, General Re reinsurance, National Indemnity, etc.). Collectively, Berkshire’s insurance subsidiaries wrote about $85.4 billion in premiums in 2023[17]. Berkshire uses its insurance float to invest in a wide array of assets – it’s an example of an investor using insurance as a vehicle for other investments[18][19].
10. AXA S.A. (France) – One of the world’s leading insurers, AXA is a French multinational that wrote about $76.5 billion in premiums in 2023[20]. AXA operates globally in life, health, and P&C insurance, and also has investment management. It has major businesses in Europe, Asia, and other regions, and is known for its size in both insurance and asset management.
    (Honorable mentions just outside the top 10 include Ping An Insurance Group (China), a huge Chinese insurer-banking conglomerate, and People’s Insurance Company of China (PICC) – these were 11th and 12th by premium in 2023[21]. In terms ofassets, which is another way to rank insurers, European and Asian insurers feature prominently – for example, Allianz and Berkshire also rank at the top by total assets (over $1 trillion each), followed closely by Chinese insurers like China Life and Ping An[22].)
    Global industry observation: The list above illustrates that U.S. health insurance corporations account for a large share of global premiums (due to the scale of U.S. healthcare spending). Meanwhile, Europe’s big composite insurers (Allianz, AXA) and China’s state-affiliated insurers (China Life, Ping An) are also top players. From an investment perspective, these companies have different drivers: health insurers depend on healthcare cost trends and policy, life insurers on interest rates and demographic trends, and P&C insurers on underwriting cycles and catastrophe events. Their stock performance can thus vary with different economic and industry conditions.

Top 10 Insurance Companies in Europe

Europe is home to several of the world’s largest and most established insurance groups. The European insurance market is mature, with high insurance penetration and large multinational insurers operating across countries. Below are the top 10 insurance companies in Europe (by gross premiums written), with a note on their positioning:

1. AXA (France): The largest insurer in Europe by premium volume. AXA wrote about €106.1 billion in gross premiums in 2022[23]. It is a diversified insurer offering life, property & casualty, and health insurance worldwide. AXA has a strong presence not only in Europe but also in Asia and the Americas. It has grown through acquisitions (e.g., buying XL Group for P&C specialty insurance) and focuses on both insurance and asset management.
2. Allianz (Germany): Europe’s second-largest insurer with about €100.6 billion in premiums[24]. Allianz is a global multi-line insurer and one of the world’s strongest financial conglomerates. It provides a broad range of insurance (life, health, motor, property, liability, etc.) and investment management services (it owns Pimco and Allianz Global Investors). Allianz’s scale and capital base have made it a cornerstone of the European insurance market[24].
3. Assicurazioni Generali (Italy): Generali is the largest insurer in Italy and third-largest in Europe, with about €85.2 billion in premiums[25]. It operates in over 50 countries, with a dominant position in Europe and growing presence in Asia and Latin America. Generali focuses on life insurance, savings products, and P&C insurance, serving over 60 million clients. The company has been streamlining operations and boosting profitability in recent years, maintaining solid market shares across Europe[25].
4. Munich Re (Germany): At ~€71.7 billion in premiums[26], Munich Re is one of the world’s largest reinsurers (it also owns the primary insurer ERGO). Munich Re is the leading reinsurer globally alongside Swiss Re. As a reinsurer, it assumes large-scale risks from other insurance companies worldwide – including catastrophe, life, and health reinsurance. Its inclusion among Europe’s top insurers reflects the size of the reinsurance sector. Munich Re’s strategy emphasizes risk knowledge, diversification, and growing in areas like specialty insurance and insurance-linked securities.
5. Zurich Insurance Group (Switzerland): Zurich is a major Swiss-based insurer that wrote about $58.8 billion (≈€59 bn) in premiums in 2022[27]. It is a global insurer active in over 210 countries, offering commercial and personal P&C coverage and life insurance. Zurich has a strong presence in North America (via its Farmers Exchanges and commercial insurance) and Europe, and it’s known for its financial stability. As one of the largest insurance groups originating from Switzerland, Zurich combines a sizable European market share with global operations.
6. Lloyd’s of London (UK): Uniquely, Lloyd’s is not a single company but a marketplace/exchange for insurance syndicates. Collectively, the Lloyd’s market accounted for about £56.3 billion (≈€56.3 bn) in premiums in 2022[28], ranking among Europe’s top ten. Lloyd’s specializes in insuring complex and specialty risks (marine, aviation, catastrophe, fine art, etc.) through its syndicates. For positioning, Lloyd’s is seen as the center of global specialty insurance and reinsurance. Investors can’t buy “Lloyd’s” stock per se, but many Lloyd’s syndicates are backed by insurance companies and funds (and Lloyd’s itself has a central fund for solvency). Its inclusion shows the importance of London as an insurance hub.
7. HDI/Talanx Group (Germany): Listed as “HDI Group” with ~€56.1 billion premiums[29], this refers to the Talanx AG group. Talanx is a German insurance conglomerate which owns HDI (a major insurer for industrial and retail clients) and a majority stake in Hannover Re (one of the world’s top reinsurers). Talanx’s business spans primary P&C insurance in Europe and emerging markets (via HDI and subsidiaries) and global reinsurance via Hannover Re. The group’s strategy focuses on diversified lines and markets, and it has grown to be one of Europe’s largest by combining primary and reinsurance operations.
8. Chubb Ltd. (Switzerland/Global): Chubb is actually a global P&C insurance company with headquarters in Zürich, Switzerland. In Europe’s ranking it appears with about $52.0 billion in premiums[30]. Chubb is the world’s largest publicly traded P&C insurer and operates in 55+ countries[31]. Its European presence was bolstered by the 2016 acquisition of Chubb by ACE Limited (which was based in Zurich and then adopted the Chubb name). Chubb writes commercial insurance, specialty coverage (financial lines, aerospace, etc.), and high-end personal lines globally. Its inclusion in the European top 10 reflects its Swiss incorporation and significant operations in Europe and the UK. Investors value Chubb for its underwriting discipline – it often posts industry-leading combined ratios and is a major player in specialty P&C worldwide[31].
9. Swiss Re (Switzerland): One of the top two global reinsurers, Swiss Re wrote about $47.9 billion in premiums in 2022[32]. Swiss Re provides life and non-life reinsurance to insurers globally and also has some primary insurance solutions units. It is a bellwether for the reinsurance industry, known for its expertise in risk transfer and a strong capital base. Being headquartered in Zurich, Swiss Re is also a pillar of the Swiss financial sector. Investors in Swiss Re look at the catastrophe loss experience, pricing cycle, and its combined ratio/return on equity over time, which can be volatile. In Europe, Swiss Re’s presence underscores the importance of reinsurance in the region’s insurance landscape.
10. CNP Assurances (France): CNP is France’s largest life insurer, with about €38.5 billion in premiums[33]. It specializes in life insurance, pensions, and personal risk insurance, and historically has distributed products via banking partners (it was partly state-owned and affiliated with the Caisse des Dépôts and La Banque Postale). CNP plays a major role in France’s life insurance market (a key part of French household savings and retirement planning) and also has operations in Brazil and other countries. In the European context, CNP’s inclusion highlights the weight of life insurance in Europe’s top companies. (Other large European life insurers just outside the top 10 include Credit Agricole Assurances and Generali’s life arm, as well as Legal & General in the UK, which are not far behind CNP[34].)
    European market positioning: Europe’s insurance sector is characterized by these giant groups that often have multi-line operations. Many are composites offering everything from retail life policies to corporate casualty cover. European insurers tend to be very globally active (e.g., AXA and Allianz in Asia and the US, Generali in Asia/Eastern Europe, Zurich and Chubb globally). They also often have asset management businesses. From an investment perspective, European insurers are monitored for their Solvency II capital ratios, their ability to generate steady profits in mature markets, and their strategies for growth (such as expanding into emerging markets or specialty lines). In recent years, low interest rates challenged life insurers in Europe, leading to shifts toward fee-based products and cost-cutting. P&C pricing in Europe has firmed up in some lines (including reinsurance) due to large catastrophe losses and other factors, benefiting companies like Munich Re, Swiss Re, and Allianz. The top European insurers generally trade at moderate multiples of book value and offer solid dividends, reflecting their stable, if unspectacular, growth profiles.

Top 10 Insurance Companies in Switzerland

Switzerland punches above its weight in insurance, with several globally important insurers domiciled there and a very well-developed domestic insurance market. Here are the top 10 insurance companies in Switzerland, including both public and private insurers (if fewer than 10 are publicly listed, major private mutuals are included). This list considers companies headquartered in Switzerland or with significant Swiss operations:

1. Zurich Insurance Group: Zurich is the largest Swiss insurer and one of the world’s top insurance groups. Headquartered in Zürich, it is a public company and a component of the Swiss Market Index. Zurich offers a broad range of insurance products globally (commercial and personal P&C, life insurance, etc.). In 2016, Zurich had about CHF 53.5 billion in premium inflows, making it by far the #1 in the Swiss market[35]. Today, Zurich remains a Fortune Global 500 company and continues to grow in key markets like North America and Asia-Pacific. For Swiss investors, Zurich is a blue-chip stock known for stable dividends. The company’s strategy emphasizes profitability over volume, and in recent years it has improved its combined ratio and divested non-core businesses to focus on core insurance operations.
2. Swiss Re: Based in Zürich, Swiss Reinsurance Company is the world’s second-largest reinsurer. It is publicly listed and a key part of Switzerland’s financial sector. Swiss Re had about CHF 33.2 billion in premiums (gross) in 2016[35] and consistently ranks among the top global reinsurers in premium and assets. It provides reinsurance in life, health, property, and casualty lines worldwide, and also engages in insurance-linked securities. Swiss Re is known for its deep expertise in risk modeling (it even publishes the widely used Sigma reports on industry trends). Investors track Swiss Re’s combined ratio in non-life reinsurance, its large loss provisions, and its Economic Value Management (EVM) performance. Swiss Re’s capital and dividend policy are also attractive – it often returns excess capital via buybacks or special dividends when catastrophe losses are moderate.
3. Chubb Limited: Chubb is an interesting case – it’s an American-origin insurer, but legally domiciled in Switzerland (Zurich) since 2016 when ACE Limited (a Swiss-incorporated company) acquired the U.S.-based Chubb and adopted its name. Chubb is publicly traded on the NYSE (ticker: CB). It is the largest publicly traded P&C insurer in the world[31], with substantial operations in North America, Europe, Asia, and Latin America. In Switzerland, Chubb’s presence is mainly as a holding company HQ and a European regional office; it doesn’t dominate Swiss domestic retail insurance, but it’s counted among Swiss-based companies. Globally, Chubb had about $55 billion in revenue in 2024[36], and it specializes in commercial insurance, specialty industrial coverage, and high-net-worth personal insurance. Chubb’s positioning in Switzerland underscores the country’s attractiveness as a base for international insurance business (due to business-friendly regulation and a strong talent pool). For investors, Chubb is known for consistent underwriting profits – it often boasts a combined ratio in the 85–95% range, reflecting very disciplined risk selection.
4. Swiss Life Holding: Swiss Life is the largest life insurance company in Switzerland. It is publicly listed and a major provider of life insurance, pension plans, and retirement products in the Swiss market (and also operates in France, Germany, and asset management). In 2016 Swiss Life collected about CHF 17.4 billion in premiums[37], making it the #3 Swiss insurer by premium volume. Swiss Life plays a crucial role in Switzerland’s private pension system (Pillar 3 and life insurance savings), and it has adapted to the low interest rate environment by shifting toward fee-based advisory services and semi-autonomous pension solutions. Swiss Life’s investment portfolio is heavily weighted to bonds and real estate to match long-term liabilities. Investors view Swiss Life in terms of its Embedded Value and ability to generate profit under strict capital requirements. The company’s solvency ratio under the Swiss Solvency Test is closely watched, and it has been robust. As of mid-2020s, Swiss Life has been increasing dividends and share buybacks, reflecting strong capital generation.
5. Helvetia Insurance: Helvetia, based in St. Gallen, is one of the leading all-line insurers in Switzerland and is publicly traded. Helvetia offers property, liability, and life insurance, with a focus on Switzerland and certain European markets (Spain, Germany, Italy, Austria through acquisitions like Helvetia acquired Spain’s Caser in 2020). In 2016 Helvetia had about CHF 8.4 billion in premiums[38] in Switzerland, ranking #4 at the time. Helvetia’s strategy combines a strong home market presence (especially among households and SMEs in Switzerland) with international growth. It operates as a composite insurer and is known for its multi-channel distribution (agency force, brokers, bancassurance partnerships). For investors, Helvetia is a mid-sized insurer with a solid dividend yield. Its financial health is good (Solvency II ratio consistently around 200% or higher) and it focuses on digital innovation to stay competitive against larger rivals.
6. Bâloise Group: Bâloise (Basler Versicherung) is another prominent Swiss insurer, headquartered in Basel, and publicly listed. Bâloise had about CHF 6.7 billion in premium income in 2016[39], making it a top 5-6 insurer in Switzerland by size. It offers a mix of non-life insurance (home, auto, commercial) and life insurance/pension solutions. Bâloise’s core markets are Switzerland, Germany, Belgium, and Luxembourg. The group has differentiated itself with a strategy called “Simply Safe,” focusing on customer-centric offers and bundling insurance with prevention and assistance services. Like other Swiss insurers, Bâloise has a strong capital position and has steadily increased its dividends. It’s slightly smaller than Helvetia, but similarly positioned as a reliable, diversified insurer in the European mid-market. Investors look at Bâloise’s combined ratio in non-life (which has generally been healthy, often in the 90-95% range) and its life business margin. Bâloise has also invested in insurtech and mobility ventures to keep pace with changing consumer needs.
7. Schweizerische Mobiliar (La Mobiliare): Mobiliar is the oldest private insurance company in Switzerland (founded in 1826) and operates as a mutual (policyholder-owned) company. It is not publicly traded, but it’s a major player – especially in non-life insurance – in the Swiss domestic market. Mobiliar is typically either #1 or #2 in Swiss household insurance, vehicle insurance, and SME insurance, with a very strong brand locally. In 2020, for example, Mobiliar had around CHF 3.47 billion in non-life premium (about 12% of the Swiss non-life market)[40][41]. As a mutual, Mobiliar shares a portion of profits with policyholders and focuses on stable growth rather than aggressive expansion. Its inclusion in the top 10 reflects its significant market share in Switzerland (the 2016 ranking data likely had Mobiliar just outside the top 10 by total premium, but by 2020 it was the #2 non-life insurer after AXA’s Swiss unit)[40][42]. From an investment perspective, one can’t buy shares in Mobiliar, but its performance does influence the competitive landscape – publicly traded peers often cite Mobiliar as a formidable competitor due to its mutual status (which can allow more customer-friendly pricing).
8. Helsana Group: Helsana is Switzerland’s largest health and accident insurance provider (by premium) and is organized as a mutual company (technically a foundation). It specializes in compulsory health insurance (required for all Swiss residents) and supplemental health and accident policies. In 2016 Helsana had about CHF 6.37 billion in premiums[43], making it the biggest health insurer and #7 overall in the Swiss market at that time. Health insurance in Switzerland operates on a non-profit basis for the basic mandatory coverage, but firms like Helsana can still generate surplus and also sell supplemental plans for profit. Helsana’s importance comes from covering a large share of the population and its role in managing healthcare costs. It’s not publicly listed, but its financials are reported – it consistently has one of the largest premium incomes in the country. For the Swiss insurance landscape, Helsana (along with CSS and others below) represents the social insurance segment, which is tightly regulated.
9. CSS Insurance: CSS is another major Swiss health insurer, organized as a mutual/cooperative. CSS had about CHF 5.86 billion in premiums in 2016[44], placing it #8 overall in Switzerland by size. Like Helsana, CSS focuses on mandatory health insurance (it is one of the top 2 by number of policyholders) as well as supplementary health and accident insurance. While not investable as a stock, CSS plays a key role in the market. Health insurers like CSS and Helsana must carefully manage medical claims (they negotiate with medical providers and implement cost-control programs) – their equivalent of the “combined ratio” is the medical loss ratio. They aim to keep premiums affordable under regulatory constraints. The presence of these health insurers in the top 10 shows that a significant portion of Swiss insurance premiums goes to health coverage. Investors in the insurance sector keep an eye on health insurance reforms or cost trends, as they can indirectly impact other lines (and overall consumer spending on insurance).
10. Groupe Mutuel: Groupe Mutuel is a Swiss insurer best known for health insurance, though it also offers life and patrimony insurance. It had about CHF 4.48 billion in premiums in 2016[45], ranking #9 in the Swiss market at that time. Like its peers, it is structured as an association of mutual companies. Groupe Mutuel has a strong presence in French-speaking Switzerland and has diversified into supplemental health, life insurance, and even some property insurance for individuals. While smaller than Helsana and CSS, it’s still a significant player. We include it here to round out the top ten, noting that if we were to consider foreign-owned Swiss subsidiaries: AXA Switzerland (the Swiss branch of France’s AXA, which acquired Winterthur) and Allianz Suisse (the Swiss arm of Germany’s Allianz) are also large, each with around 10–12% of certain market segments[46][47]. For instance, AXA’s Swiss unit (formerly Winterthur) had about CHF 3.47 bn non-life premiums in 2020 (tied with Mobiliar at ~12% market share)[48][40] and also a life insurance business. These subsidiaries are ultimately reflected in the parent companies’ financials, so local investors would invest via AXA or Allianz stocks. In terms of Swiss-headquartered companies, Vaudoise Assurances (a mutual insurer based in Lausanne) is another notable firm just outside the top 10, with about CHF 1.0 billion in non-life premiums and additional life business[49]. Vaudoise is partially listed and known for its strong regional franchise.
    Swiss market characteristics: The Swiss insurance market is highly developed, with very high insurance density (premiums per capita) – life insurance and private pensions are important due to Switzerland’s three-pillar pension system, and non-life insurance penetration is also high. Swiss insurers are well-capitalized and Switzerland’s regulatory regime (the Swiss Solvency Test) is considered rigorous. From an investment perspective, Swiss insurance stocks like Zurich, Swiss Re, Swiss Life, Helvetia, Bâloise (and Partners Group if considering asset management) form a significant part of the Swiss stock market. They tend to offer attractive dividends and stability. The presence of mutuals like Mobiliar and health insurers means not all the market is investable, which can help the publicly traded companies in some segments (less price competition from pure profit-driven players). Additionally, Switzerland’s role as an insurance hub (for reinsurance and specialty insurance) means companies like Swiss Re and Chubb bring a lot of international business to the country, reinforcing Switzerland’s status in global insurance.

Investment Perspectives: Evaluating Insurance Companies

Investing in insurance companies requires understanding a distinct set of metrics and considerations compared to most industries. Insurance firms can be attractive investments – many have stable, long-term earnings and pay steady dividends – but they also come with specific risks (natural catastrophes, pandemics, market swings) and accounting nuances. Here are key aspects and metrics to consider when looking at insurers from an investment perspective:

• Underwriting Profitability (Combined Ratio): As mentioned, the combined ratio is a critical indicator for non-life insurers (P&C and reinsurance). It shows the efficiency of the insurer’s core insurance operations – a combined ratio under 100% is ideal, indicating the company is making an underwriting profit[3]. A combined ratio over 100% means the insurer is relying on investment income to cover an underwriting loss[4]. Many high-quality P&C insurers pride themselves on combined ratios in the 90s or even 80s. An investor will compare combined ratios across peers; even a few percentage points better can translate into significantly higher profitability, since every point under 100 adds to underwriting margin. For example, Chubb’s consistently low combined ratio has been a reason for its premium valuation – it indicates strong risk selection and pricing. Conversely, if a company’s combined ratio is consistently above 100, one should investigate why (is it underpricing risk? Facing unusually high claims? etc.). Loss ratio (claims/premiums) and expense ratio (operating costs/premiums) are sub-components; improving either can improve profitability[50]. It’s worth noting that even insurers with combined ratios slightly over 100 can be profitable overall due to investment income, but there is more uncertainty in that model[5]. Buffett’s strategy has been to find insurers who do not lose money on underwriting, effectively getting their float at zero or negative cost[11].
• Investment Portfolio Performance: Insurance companies typically invest the float (and their capital) in relatively conservative assets – mainly bonds, along with some stocks, mortgages, real estate, and alternatives[51]. Investment yield (net investment income divided by the investment portfolio) is a key driver of profit, especially for life insurers and long-tail P&C insurers. In a low interest rate environment, yields on insurers’ bond portfolios were low, squeezing earnings. Now, with higher interest rates (as of 2024–2025), new money yields are higher, which is improving insurers’ investment income[10]. Investors should assess an insurer’s asset mix (is it taking on a lot of credit risk or illiquid assets to boost yield?) and its duration matching. A concern is unrealized losses on bonds when rates rise – since insurers hold large bond portfolios, rising rates can reduce the market value of those bonds, impacting book value and other comprehensive income. However, if the insurer can hold bonds to maturity, accounting losses may not realize. Many insurers in 2022–2023 saw a drop in book value due to higher rates, but that also implies future earnings will be higher (reinvesting at higher rates). Analysts often look at net investment income growth and portfolio composition (credit quality, allocation to equities, etc.). For life insurers, the investment spread (investment return minus crediting rate to policyholders) is crucial[8], and they manage this with asset-liability matching and sometimes by adjusting product rates. Additionally, investment results can be volatile due to realized gains/losses – in distressed markets, insurers might take impairments on equities or alternative investments.
• Capital Strength and Solvency: Insurance is a highly regulated industry; companies must hold sufficient capital to ensure claims will be paid. Metrics like the Solvency II ratio (for European insurers) and Risk-Based Capital (for U.S. insurers) are important. For example, a Solvency II ratio of 160% means the insurer has capital equal to 1.6 times the regulatory required capital. Investors prefer insurers with robust capital buffers (often > 180% in Europe for comfort), as it gives flexibility for growth, dividends, and weathering big losses. If an insurer’s capital position weakens (due to large losses or investment declines), it might face downgrades or be forced to raise equity or cut dividends. Leverage is another aspect – insurers are typically measured by debt-to-capital ratios and the adequacy of reserves. Reserving adequacy (for future claims) is a more technical point, but investors watch if companies consistently have to strengthen reserves (a red flag) or if they release reserves (which can flatter earnings). Rating agencies like A.M. Best or S&P give financial strength ratings to insurers; a strong rating (e.g., A or A+ and above) is a positive sign.
• Growth and Market Position: Insurance is a competitive, mature industry in many regions. Growth can come from entering new markets or product lines, or during “hard” pricing cycles. Investors will examine an insurer’s premium growth (or policy sales growth) relative to peers. For instance, many property-catastrophe reinsurers saw double-digit premium growth in 2023–2024 as prices spiked following large catastrophe losses[52]. Similarly, health insurers might grow by enrolling more members or acquiring rivals. Market share stability is often a sign of strong distribution capabilities (e.g., a company like AXA or Allianz has a large tied-agents network and broker relationships that keep business coming). However, growth must be profitable – chasing premium at the expense of underwriting discipline can backfire with future losses. So, a savvy investor prefers steady, profitable growth over erratic expansion.
• Expense Management and Efficiency: Especially in mature markets, cost efficiency differentiates insurers. The expense ratio part of the combined ratio reflects this[50]. Large insurers benefit from economies of scale and technology investments (e.g., using automation, AI in underwriting, digital customer service) to reduce costs. Life insurers focus on administration costs per policy and have been streamlining by moving business online. A lower expense base can allow an insurer to either offer more competitive prices or simply earn higher margins. Many European insurers have multi-year cost savings programs (for example, Generali and Aviva have both had such programs) – investors monitor their progress. The use of technology (insurtech innovations) is a theme: companies that modernize can gain an edge in expense and also in customer experience.
• Product Mix and Segment Performance: The insurance industry spans many segments – auto insurance, homeowners, commercial liability, workers’ comp, life, annuities, health, etc. Each has its own dynamics. An investor will dissect an insurer’s earnings by segment. For example, is the insurer heavily exposed to catastrophe losses (like a reinsurer or a coastal property insurer)? Does it have a large life annuity block that is sensitive to interest rates? Does it write long-tail casualty cover (which can have latent claims that emerge years later, like asbestos or medical malpractice)? Diversification can be an asset – many big insurers are conglomerates of different lines, which can balance each other. On the other hand, pure-play companies (like pure health insurers or pure reinsurers) might carry more concentrated risk but also might be valued differently (often at lower earnings multiples if risk is higher). In recent times, some conglomerates have actually tried to simplify (MetLife spun off part of its life business; Generali exited certain international markets) to focus on core profitable lines. Investors will favor companies whose product mix aligns with their expertise and risk appetite. A warning sign could be if an insurer expands into a hot new area without a track record (e.g., cyber insurance growth has been huge; if an insurer rapidly grows there, does it truly understand the cyber risk accumulation?).
• Valuation Metrics for Investors: Insurance companies are often valued using book value and return on equity (ROE). Since insurance earnings can be volatile year to year, the price-to-earnings (P/E) ratio is sometimes less emphasized than price-to-book (P/B) ratio. A healthy insurer with ROE close to or above its cost of capital might trade around or above book value. For example, well-regarded P&C insurers often trade at 1.2–2.0 times book value, whereas life insurers (with more interest-rate exposure) might trade closer to 0.8–1.2 times book (varying by region and company). One reason P/B is a key metric: insurance balance sheets are fairly transparent – assets are mostly market-valued, and liabilities (reserves) are actuarially determined, so book value is a meaningful gauge of net worth[53]. Additionally, forecasting long-term cash flows is hard (due to unpredictable claims and market swings), so investors lean on asset-based multiples like P/B, and then adjust for ROE (higher ROE insurers deserve higher P/B). In fact, there’s a relationship where insurers with sustainably higher ROAE (return on average equity) command higher P/B ratios[54][55]. Analysts also use embedded value for life insurers – which is the present value of future profits from existing policies plus adjusted net assets – to gauge intrinsic value beyond the accounting book equity.
• Dividends and Share Buybacks: Insurers, especially in Europe and developed markets, are often seen as dividend-paying stocks. Their businesses, while cyclical, tend to produce excess capital in normal years. Many insurers return capital to shareholders if it’s not needed for growth. For example, Allianz, AXA, Zurich, and Swiss Life are known for relatively high dividend yields (often 4–6% range) and progressive dividend policies. U.S. insurers like Travelers or Chubb also consistently increase dividends and do share repurchases. When evaluating an insurer, an investor will consider the dividend sustainability (payout ratio relative to earnings, and capital headroom) and the history of capital returns. A caution is that after big loss events or financial crises, insurers may cut dividends to preserve capital (as seen in 2020 some European insurers paused dividends due to regulatory pressure amid COVID). But generally, established insurers strive to be reliable dividend payers.
• Risk Factors: Key risks for insurance investments include:
• Catastrophe Risk: A single event (major hurricane, earthquake, pandemic, etc.) can cause outsized losses. P&C insurers and reinsurers manage this with exposure limits and reinsurance, but investors must be prepared for volatility. Looking at an insurer’s probable maximum loss (PML) in a 1-in-100 year event, and how that compares to its capital, is one way to gauge this.
• Interest Rate and Market Risk: Life insurers and any insurer with long-duration liabilities are sensitive to interest rates (affecting both asset values and liability valuations). Sharp rate movements or credit market dislocations can impact them. Also, equity market drops can reduce fee income for insurers with asset management or unit-linked products, and can cause investment losses.
• Underwriting Cycle: Insurance pricing goes through cycles. After a period of heavy losses, premiums tend to rise (hard market), which boosts insurer margins; conversely, if results have been good for many years, competition may drive premiums down (soft market), squeezing future margins. Investors try to time these cycles – for example, reinsurance saw a hard market in 2021–2023 after catastrophe losses, which is favorable for reinsurer stock prospects[52]. Understanding where each company stands in the cycle (and how quickly it can reprice policies – e.g., most P&C renew annually, but life policies are long-term) is part of the analysis.
• Regulatory Changes: Insurance is subject to regulatory and political risk. Changes in laws (like healthcare laws affecting health insurers, or auto insurance legal changes, or tax reforms on life insurance) can impact profitability. For instance, an investor in European insurers watches developments like Solvency II updates, or in the US the potential expansion of Medicare (which could affect private health insurers).
• Management and Strategy: Finally, as with any company, management quality matters. Insurance, perhaps more than many industries, requires a long-term mindset and prudent risk management. A company known for underwriting discipline (not chasing low prices) and conservative reserving will often trade at a premium. Investors will look at metrics like prior-year reserve development (does the company habitually underestimate claims that later require additional reserves?) and the volatility of its earnings. Consistency and avoidance of nasty surprises are rewarded. The old saying in insurance is “float is money we hold but don’t own” – good managers remember that and invest cautiously[56], whereas aggressive investment bets (e.g. too much high-yield or equity) can lead to trouble.
  Bottom line: Insurance companies can be seen as a combination of an operating business (the underwriting franchise, which ideally produces at least a small profit and market share stability) and a large investment portfolio (where savvy allocation can add to returns). When evaluating them as investments, one should assess both sides. A great insurance investment often comes down to finding a well-run insurer that is temporarily undervalued – perhaps due to short-term fears (like one bad catastrophe season or low interest rates) – but that has a proven record of book value growth, prudent underwriting, and effective capital use. This is exactly what Warren Buffett did with his early investments: he identified insurers that generated low-cost float and then used that float to compound returns. While insurance is not always straightforward for outsiders to analyze (“to know what is going on inside an insurance company, one must be inside the insurance company,” as the saying goes), the rewards for doing one’s homework can be substantial, as a solid insurer can produce decades of steady growth. Investors should remain aware of the cyclical and event-driven risks, but with a diversified portfolio of insurance companies or a focus on best-in-class operators, the insurance sector can be a profitable component of an investment strategy – often delivering dividends, book value growth, and an element of inflation protection (since premiums can be adjusted over time).
  Sources:
• Overview of insurance float and Buffett’s approach[57][11]
• Importance of investment income for insurers[2][8]
• Definition of combined ratio and underwriting profitability[3][4]
• European and global insurer rankings (premiums, assets)[58][23]
• Swiss insurance market ranking and companies[59][31]
• Differences between P&C and life insurance business characteristics[6][9]
• Valuation metrics for insurers (P/B, ROE, etc.)[60][61]

[1][11][18][19][56][57] The Insurance Float: the Secret Behind Warren Buffett’s Wealth
https://finmasters.com/warren-buffett-insurance-float/
[2][51] Insurance Company Investments: Investing the Float to Create a Stream of Revenue - GAAP Dynamics
https://www.gaapdynamics.com/insights/blog/2022/02/08/insurance-companies-investing-the-float-to-create-a-stream-of-revenue/
[3][4][5][50] Combined Ratio: Definition, What It Measures, Formula, and Examples
https://www.investopedia.com/terms/c/combinedratio.asp
[6][7][9] P&C vs Life Insurance - Financial Edge
https://www.fe.training/free-resources/fig/p-and-c-vs-life-insurance/
[8][10] How the Life Insurance Industry Works | Umbrex
https://umbrex.com/resources/how-industries-work/insurance/how-the-life-insurance-industry-works/
[12][13][14][15][16][17][20][21][22][52][58] World's Largest Insurance Companies - Reinsurance News
https://www.reinsurancene.ws/worlds-largest-insurance-companies/
[23][24][25][26][27][28][29][30][32][33][34] Largest 30 European Insurers - Reinsurance News
https://www.reinsurancene.ws/largest-30-european-insurers/
[31][36] Chubb Limited - Wikipedia
https://en.wikipedia.org/wiki/Chubb_Limited
[35][37][38][39][43][44][45][59] List of Swiss companies by revenue - Wikipedia
https://en.wikipedia.org/wiki/List_of_Swiss_companies_by_revenue
[40][41][42][46][47][48][49] Ranking of Swiss insurers per 2020 turnover
https://www.atlas-mag.net/en/article/ranking-of-swiss-insurers
[53][54][55][60][61] A Comprehensive Guide to Insurance Company Valuation | Eqvista
https://eqvista.com/company-valuation/insurance-company-valuation/

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