The nonlife insurer shed 21.4% by July 13 since the British referendum June 23, the result of which only heightened fears of an upcoming vote on constitutional reform in Italy, which could potentially topple the center-left government of Matteo Renzi.
Italian bank and insurance stocks like Unipol and Generali — the sixth-worst performer, with a 15.32% loss — have suffered more than U.K.-listed companies, which face being cut out of the EU’s Single Market.
While the post-Brexit prospect of a prolongation of ultra-low interest rates dims the outlook for life insurers’ investments, nonlife insurers have benefit from being able to rely more on underwriting income. But Unipol’s exposure to Italy and troubles in its banking unit mean it has suffered regardless.
Unipol Banca SpA’s nonperforming loans came in at €3.9 billion at the end of the first quarter, almost half loans to customers of €8.7 billion.
Unipol Banca, which had a coverage ratio of 44.6% at the end of the first quarter, is aiming to cut NPLs to €3.3 billion by 2018.
Reinsurers, with large non-European exposures, have best withstood the market turbulence. Lancashire Holdings Ltd. and Hiscox Ltd., which underwrite risk through Lloyd’s of London, saw increases in their share prices, albeit in the context of a declining pound sterling.
Even if the U.K. leaves the EU entirely, the position of the country’s large reinsurance industry would be relatively secure, since reinsurers are not dependent on Single Market access to provide reinsurance services to European clients, Aon Benfield said in a July note.
