Few industries carry as much financial might and profitability as insurance with as little buzz. Warren Buffett’s Berkshire Hathaway empire runs on insurance operations like Geico, but they play second fiddle in the minds of ordinary investors to his closely watched investment portfolio. “Our insurance business keeps us afloat,” he told shareholders at Berkshire’s annual meeting earlier in May.
In this quiet industry, there is major disruption facing facing the world’s biggest firms. An era of low interest rates has cut into profitability, causing major restructurings of the industry’s leaders.
The United States lost a major insurer last year when CVS Health closed its $70 billion takeover of Aetna. Cigna, ranked #149 on the Forbes Global 2000, acquired Express Scripts a month later. Paris-based Axa Group also acquired property and casualty insurer XL Group for $15 billion last year. Titans like Metlife and AIG continue revamp their operations, spinning off non-core assets and merging operational units.
Amid this change, new entrants in the form of private equity giants like Apollo, Blackstone and KKR, are entering the sector, aiming to manage what could be trillions in insurance assets, investing policies in more complex (and higher yielding) fixed income securities. “It’s a mediocre business for most people,” said Charlie Munger, Berkshire’s vice chairman, of insurance at the conglomerate’s investor meeting.
As a more challenging era takes shape, insurance titans are tumbling down the Forbes Global list of most powerful companies.
Of the six insurers that made the top-100 of the Forbes Global 2000, only two insurers, China’s Ping An Insurance Group, ranked #7, and Japan Post Holdings, #66, advanced. Germany’s Allianz, #23, United Health, #32, Metlife, #78, and Axa Group, #85, all slid. China Life, #105, the United Kingdom’s Prudential, #112, and Hong Kong-based AIA Group, #113, all slid out of the top-100. Other large firms losing ground were Zurich Insurance Group, #117, Chubb, #137, China Pacific, #140, Generali, #144, Dai-Ichi Life, #221, Aflac, #223-t, Allstate, #223-t, and Aviva, #232.
Industry gainers included Germany’s Munich Re, #147, China’s People’s Insurance, #155, Tokio Marine of Japan, #163, and Canada’s Manulife, #166.
The FORBES Global 2000 ranking is based on a composite score from equally-weighted measures of revenue, profits, assets and market value. Among the world’s 25 largest insurers, China, Japan and the United States each house four, Switzerland and the United Kingdom house three, Germany has two, and Canada, France, Italy, Hong Kong and Taiwan each claim one spot. The 2019 list features public companies that together account for $27.3 trillion in revenue, $1.5 trillion in profit, $20 trillion of assets, and have a combined market value of $24 trillion.
China’s Ping An Insurance Group ranks first among insurers, moving up from overall spot #10 last year to #6 on this year’s list. Over the 12 months to April 7, when Global 2000 data was locked in, Ping An generated $141.6 billion in revenue, $16.3 billion in profits and its market capitalization stood at $220 billion. The tech-driven company boasted of 143 million customers at year-end 2017, up 10% from the beginning of the year.