Fitch predicts moderate rise in profitability for Portugal’s insurers in 2024

Portugal’s non-life insurance sector is expected to report improved profitability in 2024, with rate increases offsetting higher claims frequency and severity, according to Fitch Ratings.

The rating agency said the sector has proved resilient to external shocks, including the pandemic and, more recently, rising inflation rates, while investment returns will also support balance sheets this year.

Fitch expects Portugal’s non-life insurers to record “moderate” improvements to their combined ratios in 2024.

At the same time, it said total market premiums are expected to book modest growth to €12bn in 2024, due to weaker demand for unit-linked products and inflation-related changes to premiums.

“We believe the challenges facing the Portuguese insurance sector in 2024 are predominantly from macroeconomic risks, followed by credit and market risks related to investment portfolios. The insurance sector is strongly capitalised, suggesting a strong loss-absorbing capacity if these risks materialise,” the rating agency said.