The cost of using investor capital by property-casualty insurers has dropped from 15 percent in the 1980s to between 7- and 8 percent, according an analysis by Swiss Re.
The Zurich-based company said in its latest sigma study that the decline in costs was due to significantly lower risk-free interest rates, equity risk premium and percentage of equity invested assets.
Veronica Scotti, who wrote the study, said that the analysis also concluded that insurers who want to keep their share prices up should focus on good underwriting results and premium volume as opposed to investment gains.
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