In 2023 the European cross-border life market, excluding the UK, is estimated to have generated nearly €34bn of new cross-border life premiums, down from €42bn in 2022, representing a 20% year-on-year decline, says AILO.
At a glance, the ‘roller-coaster’ pattern of cross-border new business across the 2019-2023 period appears to mirror that of the global market.
On closer inspection the European region fared:
• Marginally worse than the global market going into the pandemic in 2020;
• Significantly better in 2021 in the post-COVID recovery period;
• Suffered slightly more in 2022 due to global economic uncertainty, inflation and post-pandemic supply issues; and
• Slightly worse again in 2023 during the high-interest rate period.
The European region is therefore not immune from the broader economic issues impacting the global cross-border life market or the domestic life insurance markets in which it operates. However, the characteristics of the European region, including the concentration of business in a small number of key markets and the dominance of relatively few product providers promoting mainly equity-linked product structures, makes the region more vulnerable to changes in investment market sentiment, M&A activity and the focus of its key players.
These themes can be clearly seen in the AILO European Cross-border Life Market in 2023 report.
Leading Markets
In 2023 the leading three markets were once again Italy, France and Germany. Together they accounted for just over three-quarters of total cross-border premiums written in the European region. Sweden and Portugal made up the top 5 markets in 2023, but virtually all European markets experienced a reduction in the levels of new business written in 2023.
Leading Jurisdictions
Companies based in the ‘Home’ jurisdictions of Luxembourg and Republic of Ireland accounted for 95% of all the cross-border life insurance business written in the European region in 2023 with Liechtenstein and the UK Dependent Territories making up the remaining 5%. However, all the ‘Home’ jurisdictions recorded lower levels of new business in 2023 compared to 2022.
Leading Companies
Four of the five companies that wrote more than €2bn of new premiums in 2022 also did so in 2023 compared to seven companies meeting this criteria in 2021.
There was quite change in the composition of the €1bn + group in 2023. Of the ten companies meeting this criteria in 2022, only five did so in 2023. Fewer companies made the €1bn + list in 2023 and business levels were generally lower in most markets compared to 2022.
The combined market share of the top 10 companies in 2023 is estimated to be 56%.
Product Types
In contrast to domestic life insurance business in Europe, the cross-border life market is dominated by unit-linked rather than traditional products. When investment markets are buoyant, this tends to benefit unit-linked providers, but despite improved investment market performance in 2023, high interest rates favoured traditional products providing guarantees or bank deposits rather than the equity-linked products of many cross-border life companies. As a result, although unit-linked products accounted for an estimated 82% of total cross-border life sales in 2023, the sector in Europe didn’t benefit fully from the global uptick in new life business that accompanied the higher interest rate economic environment.
Commenting on The AILO European Cross-border Life Market in 2023 report, Volker Schultz, chief financial officer of Prisma Life in Liechtenstein and AILO Management Committee Member said: “The European cross-border life sector has experienced a roller-coaster five years since the start of the pandemic. Fully focused on dealing with the day-to-day consequences of these issues, it’s easy to forget what a turbulent period it’s been and how the frequent shocks have prevented an honest assessment of the market.
“So, while it’s easy to be disappointed by aspects of the 2023 result in Europe, the fundamentals of the sector remain sound, so it’s to be hoped that a return to more stable trading conditions will see an uptick in business in the near future.”
The European Cross-border Life Market in 2023 report is available exclusively to AILO Members on request to the secretariat@ailo.org
