Life insurance in Europe is taking off

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As consumers stay away from riskier investments, they’re choosing this coverage instead.

Two of the largest European insurers, Axa and Allianz, are exceeding the profit predictions as consumers who are shying away from risky investments are choosing traditional life insurance for its comparative stability and safety.

The top insurer in Europe, Allianz, saw 2.8 percent greater year over year profits in the second quarter.

The insurer reported that its operating profit was €2.37 billion in the second quarter of 2012. This is an increase that is far about the €2.2 billion that analysts had been expecting. The increased purchasing of life insurance is being greatly credited with this achievement.

Similarly, life insurance led Axa to beat its own profit predictions in the same time period.

This second largest European insurer brought in a net income of €2.6 billion in the first half of the year, which was well beyond the average prediction of €2.11 billion.

These two insurers have both seen great benefits from the strong sales of traditional forms of life insurance policies, which come with very little or no investment risk at all. These have been greatly favored by consumers over unit-linked policies where the returns that policyholders see are based entirely on the performance of the market.

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Allianz, a company based in Germany, has specifically said that the sales of life insurance have been especially strong in Italy and Spain, countries that are facing critical national debt. This is an indication that consumers are seeing the appeal of the good credit rating and financial strength of the insurer.

According to Oliver Baete, the chief financial officer at Allianz, “The customer assumes correctly that Allianz is more stable than his own government.”

Shares in both of these top European insurers have risen significantly due to life insurance sales. Allianz was up approximately 6 percent, where Axa rose by 5 percent. This outperformed the Stoxx 600 European insurance share index by 4 percent.

The revenues for both companies have increased in the area of life insurance. For Allianz, they increased by 3.5 percent to €5.8 billion within the second quarter. Its riskier investments dropped by 4.2 percent to reach €7.1 billion.

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