Insurance at an Inflection Point: Fragmentation, Transition, and the New CapEx Supercycle

It's a great snapshot to the broader discussion I wanted to have with you about the outlook of the industry on the basis of the sigma you mentioned you published this summer, the world insurance in twenty twenty-six.

There is one theme, very important, that you mentioned in the sigma, which I picked up around the industry being at an inflection point.

So tell us a little bit if you see this as a cyclical adjustment after a strong period of performance or if you see the industry at a significant, maybe fundamental structural shift for the sector.

I think it's both, right? We see cyclical move.

We also see a, a structural move, and I think the structural story for insurance markets is much more important.

Let me maybe disentangle at both, right? The cyclical non-life insurance, we see it as normalizing.

We had the twenty twenty-four, twenty twenty-five, which was very strong market conditions on the back of the, the high inflation environment that we had.

The market firmed and needed to firm as well.

Now we see this non-life insurance, both on the price side as well as on premium side normalizing.

We expect from a Swiss Re Institute non-life real premium growth almost come to a standstill, zero point six percent growth on the real premium side.

Profitability, we expect it to remain solid.

We also think that return on equity will by far still cover cost of capital.

It's a market which still has lots of profitability, pockets of profitability as well capitalized.

We don't see a change of that.

Where I mentioned that real premium growth comes to a, almost to a standstill, if you look at it in nominal terms, if you add inflation, you see the market growing about three to four percent, but below trend growth.

But besides the cyclical move, I think the structural is much more interesting.

Underneath the cyclical move, you have the bigger structural change.

And if you think about that, if you look at over the last six years, you had four, uh, supply shocks, right? You had Covid, you had Ukraine, you had Iran, also the global trade shock with the higher tariffs emanating from the US.

And four supply shocks in six years, it's not l-it's not little.

Looking ahead, we do believe that two economic developments, the polar world will remain intact.

We do believe that the global race on AI, the global race on physical resources, the global race also on renewable energy and energy security itself will remain intact.

Why? 'Cause it matters.

It matters to economic security.

And if it matters to economic security, then it also means you're gonna have continued Pressure on the supply side, on the supply chains as well.

And I think on top of that, if you have continued high investment as we see right now in terms of data center, which was the, the sigma that we launched, yes, insurance growth is slowing and has been slowing cyclically.