However, most of the top companies were not only affected due to the decline in investment returns, owing to a lower interest rate environment and “uncertainty” in financial markets in the face of Covid-19. They also witnessed decline in new business activities and, subsequently, premium income.
The data also showed that Prudential was mainly impacted due to a “substantial rise” in outward reinsurance premiums, which amounted to $32.2bn (£23.1bn) up from $1.6bn (£1.8bn) the previous year, as it paid the majority of the amount to Athene Life Re for reinsuring its “in-force fixed and fixed index annuity business”, which subsequently brought down its net earned premiums by around 75%.
Legal and General, which derives approximately 80% of its revenue from investment activities, saw a 26.1% contraction in its investment income in 2020 at £39.2bn, compared to £53bn the previous year, which overall impacted its revenue stream.
Another major insurer that was impacted was Zurich Insurance Group, whose revenue stream from investment income almost halved over that from the previous year, reaching $12.3bn (£8.8bn) from $24.8bn (£17.8bn). This was attributed to an almost 56% decrease in investment results on “unit-linked investments” related to its life insurance business.
Parth Vala, company profiles analyst at GlobalData, said: “Unlike Prudential, Aviva suffered due to its weak investment returns, especially from its UK & Ireland Life business; and manage-for-value business in France and Italy; where its income from investments dropped by 51%, 70%, and 28%, respectively.”