fitchratings.com | January 2020 At our Insurance Roadshow Series which took place in London, Frankfurt and Paris, senior analysts from Fitch discussed challenges facing the European Insurance sector. The series provided a comparison of major European insurers and a review of Solvency II 4 years on, along with an overview of the Life, Non-Life and Reinsurance markets. In case you were unable to attend, we have selected highlights from the event and sector to share with you. For more information on our Insurance coverage visit FitchRatings.com French, German Life Insurance Outlooks Go Negative on Low Rates We have revised our sector outlook for French and German life insurance from stable to negative, reflecting the adverse effects of ultra-low interest rates on insurers’ capital, earnings and business models. Nevertheless, most ratings remain on stable outlook as insurers typically still have strong capital for their rating levels and are adapting their businesses to reduce sensitivity to interest rates. Webinar Replay: French and German Life Insurance – Compare and Contrast View our webinar on the Life Insurance sector in France and Germany with Stephan Kalb and Manuel Arrive, senior analysts in the EMEA Insurance team, who compared and contrasted the two markets in a ‘lower-for-longer’ rate scenario. 2020 Outlook: UK Life Insurance The sector outlook for the UK life insurance market remains stable. This is because we believe that strong structural demand for savings products and pension de-risking solutions will not be significantly affected by near-term economic challenges and political uncertainty. These positives are partly offset by the highly competitive nature of the savings market and the reduction in bond yields in 2019. VIEW WEBINAR LEARN MORE LEARN MORE
Transcript
fitchratings.com | January 2020
At our Insurance Roadshow Series which took place in London, Frankfurt and Paris, senior analysts from Fitch discussed challenges facing the European Insurance sector. The series provided a comparison of major European insurers and a review of Solvency II 4 years on, along with an overview of the Life, Non-Life and Reinsurance markets. In case you were unable to attend, we have selected highlights from the event and
sector to share with you.
For more information on our Insurance coverage visit FitchRatings.com
French, German Life Insurance Outlooks Go Negative on Low Rates
We have revised our sector outlook for French and German life insurance from stable to negative, reflecting the adverse effects of ultra-low interest rates on insurers’ capital, earnings and business models. Nevertheless, most ratings remain on stable outlook as insurers typically still have strong capital for their rating levels and are adapting their businesses to reduce sensitivity to interest rates.
Webinar Replay: French and German Life Insurance – Compare and Contrast
View our webinar on the Life Insurance sector in France and Germany with Stephan Kalb and Manuel Arrive, senior analysts in the EMEA Insurance team, who compared and contrasted the two markets in a ‘lower-for-longer’ rate scenario.
2020 Outlook: UK Life Insurance
The sector outlook for the UK life insurance market remains stable. This is because we believe that strong structural demand for savings products and pension de-risking solutions will not be significantly affected by near-term economic challenges and political uncertainty. These positives are partly offset by the highly competitive nature of the savings market and the reduction in bond yields in 2019.
Webinar Replay: Fitch on Life Insurance Consolidators
View our webinar on the European Life Insurance consolidation industry with Willem Loots, Senior Director in the EMEA Insurance team.
Talking points
• Key industry drivers and their progress in 2019
• Key rating considerations for Fitch’s relevant portfolio
• Prospects of the sector into 2020 and the medium term
Global Reinsurance
Our tenth edition of the Global Reinsurance Guide provides reinsurance brokers, security committees and reinsurance investors with the agency’s latest research and views on the global reinsurance sector.
German Motor Rates Decline, Catastrophe Losses Increase
German non-life insurers are likely to continue increasing their premium income in 2020 to maintain profitability in the face of dwindling investment returns. Our sector outlook remains stable, reflecting our expectation that insurers will achieve premium growth sufficient to maintain good profitability.
We have revised the sector outlook for the German life insurance industry to negative from stable. The revision reflects the negative impact from further declined market interest rates on reinvestment yields and the knock-on effects on investment margin and capital.
2020 Outlook: French InsuranceWe have revised our sector outlook on the French life insurance market to negative from stable. The outlook change reflects increasing pressure on the sustainability of the business model, and on capitalisation and earnings, due to prolonged low-to-negative interest rates.
2020 Outlook: Dutch InsuranceWe have maintained a Stable Outlook on the Dutch insurance market for 2020, despite a decline in government bond yields in 2019. We believe Dutch life insurers have made significant progress in adapting to the low-rate environment by revising strategies and product offerings. In particular, Dutch insurers’ business models are not reliant on selling interest-sensitive products, and are able to manage the duration risk related to the run-off of long-term guarantee business.
2020 Outlook: Italian InsuranceOur sector outlook for the Italian life insurance market remains negative, reflecting our view that the high sensitivity to credit spreads on Italian government debt and very low interest rates will have a negative impact on insurers’ capitalisation in 2020. We expect reinvestment yields to fall, rendering asset-liability management (ALM) more difficult for life insurers. We expect surrender rates to remain low, though, as the relative attractiveness of life policies increases. New business mix should remain tilted towards traditional life policies.
Spanish Insurers Remain ResilientThe credit fundamentals of the Spanish insurance market are strong, with healthy profits both in the life and non-life sectors, robust capitalisation, and sound reserving and investment practices. Spain offers significant opportunities for growth given the insurance penetration rate of 5.5%, lower than in other developed economies.
UK Non-Life: London Market – Revised to Stable; UK Non-Life Company Market - NegativeFitch has revised the sector outlook for the London market to stable from negative. This reflects the improved overall pricing environment in the London market, which we expect will translate into improving underwriting results. Fitch’s sector outlook for the UK non-life company market remains negative as the sector faces high claims inflation and a weak pricing environment in both the home and motor markets.
