Aon says it has identified the key traits of strong and weak insurers and reinsurers, as a stabilising market increases the focus on how companies sustain profitable growth through the pricing cycle.

The broker says it analysed 100 companies operating in different segments of the property and casualty market worldwide.

Traits displayed by the few companies achieving “spectacular return on average equity” include risk appetite clarity, speed and agility that give first-move advantages, and strong data and analytic capabilities.

They have innovative underwriting and reduce costs through automation and the use of delegated authority to third parties, such as managing general agents and participation in broker facilities.

These companies can attract top underwriting, claims and actuarial personnel and diverse talent from industry or in vital areas such as data science. Excellent distribution management and a sophisticated, analytics-driven approach to capital that allows flexible use of reinsurance, debt and equity in response to market conditions are also noted.

“Leaders who have access to reliable and robust information and intelligence on their business and the changing context in which they operate will be the winners,” Aon global growth leader, strategy and technology group UK Paul Campbell said.

The bottom-quartile performers over five years have weaker growth records and returns on equity below the cost of capital.

Aon says traits among that group include being reactive to market conditions, with risk appetite and portfolio decisions often taken after results shocks in segments or business units. They may be constantly remediating parts of the portfolio and mistiming exits and entries.

They rely too much on internal expertise and data, and build technology in-house, resulting in insular and incomplete insights on risk and unwieldy legacy systems that create rigid, unresponsive processes, it says.

Other traits include believing strongly in the art of underwriting and their ability to pick and price the best risks in the open market, and being suspicious of automated and algorithmic underwriting, broker facilities and follow-market plays.

These businesses struggle to attract top talent, are dependent on long-tenured staff, do not tend to bring in as many people with backgrounds outside insurance, and have reward structures that create a silo mentality and aversion to risk-taking.

Aon says to sustain profitable expansion, companies need to define a clear strategic vision, invest in data and analytics, and bring together cross-functional expertise and be scientific about the growth.