The life insurance sector has fallen by over 3 pct today, including Prudential and Aviva.
The concern revolved around a report by Swiss Re that showed premiums declined by 11.3 percent in the UK whilst non-life remained more consistent at around -3.1 pct, amidst increasing competition and lack of capital.
"The industry's profitability and capital recovered significantly, but have not yet reached pre-crisis levels." The report said.
Commenting on the report today, analysts warned that pressure on non-life prices would increase premiums in the UK, whilst the life sector remained difficult as a fair amount of churn still existed in new business.
Overall, Swiss Re's report showed that emerging markets enjoyed stronger increases in growth with China and India rising 12.8 pct and 10.1 pct respectively.
"Besides the rise in premium rates, what is needed to bring the non-life insurance industry back to adequate profitability levels is the expected rise in interest rates in the medium term," said Staib.
"Given the strong competitive pressures in the insurance industry, it will be difficult to improve profitability significantly." He added. "We have also seen some costly natural catastrophes this year, which will impact technical results."
The FTSE 100 meanwhile had dropped by 157 points at close of trade.
Meanwhile, bid speculation continued, surrounding the four major insurance companies in the UK as Aviva 'made moves' for Prudential's UK business.
According to the press reports, a senior executive was quoted:
"Moss [Aviva Chief Executive] would be unwilling to pass up an opportunity to buy Prudential's British business - valued at more than £5bn - which could be merged with Aviva's UK interests. But price would have to be compelling to make Aviva reverse its current tack of expanding in Europe, where Moss views growth as more promising."
The Aviva executive added that Aviva "would not sit idly by" while competitor Resolution, headed by Clive Cowdery consolidated the market.
Resolution's next move appears to be Prudential UK after acquiring Axa's life insurance assets for £2.75bn last week.
Barrie Cornes, analyst for Panmure Gordon added that moves between the big four insurance companies Aviva, Prudential, L&G and Standard Life appeared unlikely although 'bolt-on' acquisitions of smaller insurance vehicles could happen.
Last week, Resolution acquired Axa's UK Life and Pensions business and merged it with its current 'Friends Provident' to form 'Friends Life'.