What's going on?

On Friday, German insurance group Allianz reported a record-breaking year, making more money than any time in its history.

What does this mean?

At $13 billion, Allianz�s 2018 profit hit the upper end of its own expectations, and the company is hoping to match or better that this year. Meanwhile, rival US insurer AIG announced a quarterly loss on Wednesday: a mix of turbulent stock markets and insurance payouts to those affected by hurricanes and wildfires weighed on its business. It would seem that AIG�s customers had worse luck than Allianz�s in 2018 � which spelled the same for the respective insurers� earnings.

Why should I care?

For markets: Risk, squared.

In a way, insurance companies are inherent gamblers. They allow the anxious and sensible alike to offset the cost of catastrophic but rare events with a small upfront payment known as a premium. Insurers don�t need to pay out often for these events � but when they do, the costs are typically large. To boost their cash levels and ability to make payments when required, insurance companies employ investment managers (all those premiums add up to some serious dough, which these investors aim to grow). But a recent survey showed that investors are nervous about the stock market. As well as weighing up the risk of natural disasters, stolen cars, and broken bones, insurers may have to add stock market volatility to their list of concerns in 2019.

For you personally: Increasingly common; increasingly expensive.

It�s widely accepted that climate change is real and having a radical impact on the world. Global warming is increasing the occurrence of natural disasters like wildfires and hurricanes � at a cost of around $650 billion in the past three years alone. Much of that cost falls on the shoulders of insurers and, with catastrophic events becoming more common, insurers will likely respond by increasing the premiums they charge you, the customer. But right now Allianz, for one, seems to be in a good place.