BCGX - Generative AI in Banking, 2023

The July 2023 Insurance Value Creators Report provides insights into the performance of the insurance industry over the past decade. Despite a challenging market, the insurance industry has shown resilience and demonstrated favorable TSR compared to other industries. However, there is still room for improvement in generating returns above the cost of equity. The report highlights that top-quartile insurers outperformed the rest of the industry, achieving average annual TSR of 14%. Insurance is a local business, and TSR and its drivers showed significant regional differences. Capital generation did not always drive TSR performance, contrary to theory and historical patterns. Market capitalization expanded in property and casualty, especially in North America and in reinsurance, but it contracted in Asia-Pacific, particularly in multiline. Size does not matter yet, and there is no clear correlation between size and TSR performance. The report suggests that insurers can take steps to generate returns above the cost of equity in the future, such as focusing on underwriting excellence, optimizing capital allocation, and pursuing M&A opportunities. Overall, the report provides valuable insights into the performance of the insurance industry and offers recommendations for insurers to improve their performance in the future.