Stable outlook for Italian and Spanish non-life insurance sectors, says Best

AM Best has maintained a stable market segment outlook on both the Italian and Spanish non-life insurance segments. In the case of the Italian market, Best said its outlook was supported by the continued expansion of the segment despite very low economic growth, together with the expectation that good operating results will be maintained, underpinned by sustained strong underwriting profitability. For the Spanish market, the key factor was the “robust, albeit slowing, growth of the Spanish economy, the insurance sector’s resilience against the turbulent geopolitical landscape and its ability to adapt to changing customer needs and new regulations”. According to Best, the Italian non-life insurance sector’s strong technical profitability, which is deemed sustainable over the medium term, was a key factor. It said most insurers have well-diversified books of business, and growth in more profitable segments has served to offset poorer performance for motor business. Technical results have been supported by consistent reserve releases, chiefly stemming from professional liability and motor. However, Best said it considers such reserve releases unsustainable over the long term, which is likely to have negative implications for profit margins. Technical results for motor are positive but considerably weaker than for other risks, and prices for motor business are stabilising following several years of decline, said the ratings agency. Despite Italy’s challenging macroeconomic environment, the non-life insurance segment remains resilient owing to its solid operational fundamentals, and continued underwriting discipline and further expansion into profitable non-motor lines are expected to support solid levels of profitability. But Best warned that further weakening in the economic environment impacting the assets and solvency levels of Italian non-life insurers, or sustained deterioration in market technical profitability, could cause the agency to revise its outlook to negative. The Spanish insurance market has shown resilient performance, producing solid underwriting results despite competitive market conditions and slowing economic growth, said Best. “Good technical discipline, together with modest rate increases across key lines of business, and the role of the Consorcio de Compensación de Seguros (CCS) in absorbing catastrophe losses, are expected to help companies maintain strong technical profitability,” it said. The Spanish economy has been slowing down since 2015 but remains resilient, said Best, and Spanish non-life gross written premium grew by 4% to €35.4bn in 2018, primarily driven by the growth of the health business, which increased by 5.6%. Best said it expects economic growth “to remain resilient, in excess of 2% for 2019, which should continue to support the development of the local non-life insurance segment, although the prevailing elevated political uncertainty could dampen the country’s economic development”. The agency added that the Spanish non-life insurance sector has displayed solid underwriting discipline, which alongside the stabilising effect of the CCS, has resulted in continuous strong technical profits. In general, Spanish insurers have diversified portfolios, and are among the most profitable in Europe, reporting a five-year average (2013-2017) combined ratio of 94.2%, said Best.

Stable outlook for Italian and Spanish non-life insurance sectors, says Best

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Related Articles