The solvency ratio of an insurance company, broadly speaking, measures its ability to guarantee the payment of its commitments to its insured parties. All companies in the European Union must calculate this ratio and disclose it publicly, as well as maintain their solvency levels at a minimum. The latest report from Mapfre Economics, Mapfre’s research arm, analyzes how the solvency levels of the 20 largest European insurance groups by premium volume have evolved.

The solvency margin measures an insurance company’s own funds against the potential obligations it might face over a one-year period. This level can fluctuate depending on factors such as changes in the company’s business environment or market volatility, as insurance companies play a key role as investors.

For the entire insurance industry, 2024 was a challenging year, and most European groups recorded setbacks in their solvency ratios. Of the 20 companies analyzed, only three ended the year with a positive change in this figure: the French company Poste Vita, which increased by 15.6 percentage points (p.p.) to 322.6%; Mapfre, up 7.8 p.p. to 207.4%; and the British company Legal & General, which also rose 7.8 p.p. to 231.9%.

The solvency ratios among the largest European companies vary, from highest to lowest, between the 322.6% of Poste Vita and the 158% of BNP. At this point, it should be noted that, although the solvency margin demonstrates a company's ability to respond to its clients, a higher figure does not necessarily mean better management: an excessive level is not efficient because the company could dedicate those resources to productive activities and investments.

Regarding the reasons for the downward evolution of insurance solvency in Europe, Mapfre Economics identifies four factors:

While interest rates had been rising since 2022, creating a more favorable environment for insurance companies’ financial activity, the trend reversed in 2024 when the European Central Bank (ECB) implemented several rate cuts. In general, this increases the valuations of insurance liabilities more than those of investment portfolios for companies that have not adequately managed market risk or backed their obligations with investments of similar duration.

Trump’s second term, coupled with regional conflicts, ushered in a period of increased volatility in financial markets, which has in turn affected insurance companies’ investment activities.

With the introduction of Solvency II regulations, some insurance companies were able to apply transitional measures to mitigate the impact of the new capital requirements. These measures have been gradually phased out, requiring insurance companies to adjust their balance sheets and resulting in lower solvency ratios.

Technical provisions are reserves that are maintained to cover possible future claims, and insurance companies can decide to increase them based on their risks or the evolution of their client portfolios.

We stand out for our geographic diversification of business

When making their solvency ratios public, insurance companies must report individually on their domestic market and their five largest non-domestic markets, while the rest are grouped into a single amount of premiums generated outside the country of origin. To analyze the degree of geographic diversification, Mapfre Economics shows these percentages individually and has calculated what proportion of the total business of the insurance groups is accounted for by countries not in each group’s top five.

We stand out in this area for our high level of diversification, with 63.5% of premiums generated outside Spain—44.1% in our five largest non-domestic markets and the remaining 19.4% in other countries. Only the two German groups, HDI (84.9%) and Allianz (74.3%), the French group Axa (73.8%), and the Austrian group VIG (70.2%) surpass us.