This Q&A explores the world of non-life insurance – an often overlooked but essential part of global markets – with Nick Martin, manager of the long-standing Polar Capital Global Insurance fund.
The interview covers how the sector provides much-needed defensiveness in volatile times, its low correlation to broader equity markets, and why its fundamentals are improving. From AI and climate risk to the concept of “float” and underwriting discipline, Nick explains why now might be a particularly attractive time to consider insurance investments, especially for those seeking resilience and consistency in uncertain economic conditions.
Why you should listen to the interview: If you’re looking for a stable corner of the market with strong fundamentals, this interview explains why insurance deserves more attention. You’ll learn how the sector offers resilience during downturns, benefits from rising interest rates, and is quietly evolving through technology — all while providing strong defensive characteristics for your portfolio.
This interview was recorded on 23 June 2025. Please note, answers are edited and condensed for clarity. To gain a fuller understanding and clearer context, please listen to the full interview.
Interview highlights:
The appeal of the insurance sector
“Insurance is everywhere. I like to say it’s the oil that greases the wheels of world trade. So ships don’t sail, planes don’t fly. Your Amazon packages don’t drop through your letterbox tomorrow without it. The sector does have a lot of defensive qualities. If you look at the fund performance in over the years, we’ve typically done well in more difficult markets and, of course, that’s when clients need it the most. That’s why I’d argue that it’s deserving of a place in any diversified portfolio.”
Strength in a storm
“Non-life insurance is a must-have product. There’s probably never been a greater appreciation of risk in company boardrooms than there is today. As long as risk is rising in the world, so should the demand for insurance, and very sadly, risk is only going up, whether that’s climate change or wars or geopolitical uncertainty or pandemics, the list goes on and on. And that rising insurance demand driven by that ever rising risk, it is pretty disconnected to what’s going on in the broader macro. You don’t need healthy economic growth to drive insurance revenues higher. So therefore it marches to a little bit of a different drumbeat.
“The other thing to consider is because the insurers are taking on the risk that we don’t want, the last thing they really want to do is double up that risk with exciting things in their investment portfolios. So the companies actually have very boring balance sheets, lots of liquidity, short term bonds, but they’re a little bit less boring than they were given we’re in a bit more of a normal interest rate environment now.
“Put it all together and you have a sector that has these defensive qualities. And if you look at our returns over time, we’ve outperforming the MSCI World by about 3% a year since we started doing this 26 plus years ago. And our performance has typically come in more volatile times. And when the sky is blue and everything’s great, insurance is a bit dull and boring, frankly, but we still go up. But it’s when markets drop we’ve historically fallen about half as much. And you put that together and you get a pretty interesting risk reward for investors.”
The original data business
“Insurance at the end of the day is a promise to pay if something bad happens. And the risk itself is becoming ever more complex. We are seeing AI and technology being more widely used now in the sector. Underwriters get presented with risks all the time. The inboxes get filled up with opportunities and you can use AI to triage those and make sure you’re focusing on those risks that are most suited to your risk appetite and the sort of business you’re really targeting.
“But I think where the differentiation is most likely to come is in the pricing of risk itself, particularly with the more complex risks. AI is adding a powerful new tool to the underwriter toolbox. And what we’re expecting to see is this already wide dispersion between the quality of insurers’ returns widening even further and therefore their own underwriting moats growing a bit and that which should be positive for the fund returns.”
The quiet compounder
“We’ve compounded returns at about 11% a year for institutional investors for 26 plus years. And if you look at our returns, they’ve actually been driven by the underlying book value growth of our companies, it’s grown on a compounded basis about 10.5-11%. So really the fund performance just reflects the company fundamentals. And you should expect that over any reasonable timeframe.
“We’ve done about 20% book value growth in 2023 and 2024, and we think we’re on track for another 16% plus in line of our expectation for 2025. So fund performance can keep up with that sort of book value growth trajectory. We should be in line for some attractive returns for investors.
“One last point is that whenever you sort of look at sector funds you might be thinking about timing and I think that’s a valid question most of the time, but I think in some ways non-life insurance is a little bit of an exception to that. And sadly very few people get excited about insurance — except for me, of course — but that really keeps valuations in the balance. There isn’t say the excitement you get sometimes in other sectors, maybe tech, where you arguably see some hype but could be vulnerable to a meaningful correction. And actually what we’ve seen over many years is that investing in insurance is all about getting rich slow. It’s about sort of the steady compounding of returns.”
Conclusion: Insurance might not make headlines, but as Nick explains, it plays a vital role in keeping the world – and portfolios – steady. With decades of experience, Nick sheds light on why rising global risks, evolving technology, and consistent compounding returns make this sector a long-term winner. Whether you’re seeking diversification or defensiveness, insurance could be your portfolio’s unsung hero.
Mian image: constantin-iordache-joQXeHz1m_8-unsplash
