Related Expertise: Insurance Industry, Reinsurance , Property and Casualty Insurance
What separates the leaders from the laggards when it comes to value creators in insurance? Profitable growth and total shareholder return (TSR) are the keys to success. Since 2017, BCG has looked at TSRs on a rolling five-year basis, revealing the insurance industry’s recent record on shareholder return and the outlook for improving performance in the current and medium-term environments.
Our insurance industry reports present research-backed recommendations for growth and transformation, best practices from insurers across sectors and geographies, and success stories from companies that have adapted to meet global insurance industry challenges. Years of research have borne out that every company can find a path to value creation in insurance. However, success depends on having a clear strategy rooted in the reality of a company’s particular circumstance, and a willingness to take decisive, bold action.
Reinsurers have delivered impressive shareholder returns. But an uncertain future looms.
The global insurance industry has had a tough time since the onset of the pandemic, but averages do not tell the full story.
Future underwriting excellence will hinge on the ability to adapt to significant macro-environmental changes and embrace advances in digital capabilities and AI.
Disaggregating companies’ total shareholder return is telling. Profitable growth is essential to sustaining long-term value creation because it contributes to each component of TSR.
US P&C insurers have performed well compared to their international counterparts. However, outperformance in the current macroeconomic environment demands a laser focus on profitable growth.
Reinsurers’ average annual total shareholder return has generally exceeded that of primary insurers over ten- and five-year horizons.
A look at the world’s 100 largest stock-listed insurers shows the advantage of having a strong operating model and advanced digital capabilities.
To reignite growth and boost returns, insurers need to fundamentally rethink their business and operating models.
TSR provides an important guiding metric for insurance industry analysis. In insurance, TSR derives from three sources: growth in tangible book value, change in the price to tangible book value multiple (P/TBV), and cash flow contribution (comprising dividend yield and share buybacks).
TSR has no memory—what worked yesterday will not necessarily be successful tomorrow. The winners will be those insurance companies that align planning, KPIs, and incentives with delivering sustained TSR and total societal impact (TSI). This means putting TSR front and center, setting targets, pressure testing plans and initiatives, allocating resources, and tracking performance through TSR and TSI lenses.
The Value Creators Report Collection
The insurance value creators report is part of BCG’s value creators collection. Explore 25 years of value creation in all industries and perspectives on value creation trends.
Managing Director & Partner
New York
Managing Director & Senior Partner
Milan
Managing Director & Partner
Zurich
Managing Director & Partner
Chicago
Partner
Zurich
Managing Director & Partner
Hong Kong
