LONDON--(BUSINESS WIRE)--A.M. Best has a stable outlook on the French non-life insurance segment. In A.M. Best’s view, French non-life insurers have demonstrated robust business models with generally well-diversified profiles in the face of significant competition, pressure on technical margins and persistent low interest rates. Insurers’ credit fundamentals are supported by solid balance sheets, with capital bases reinforced by resilient profits – despite difficult operating conditions. Recent legislative reforms aimed at greater protection for policyholders present further challenges to the industry and heighten the competitive environment in certain key market segments.
A new Best’s Briefing, “Market Segment Outlook: French Non-Life” states that against a backdrop of modest economic expansion, growth within the non-life insurance sector has remained limited, at around 2% in each year since 2013. The economic and competitive pressures, translating into challenging pricing conditions, have weighed on insurers’ underwriting performance, with non-life combined ratios hovering around 100% since 2007 (excluding medical business). Overall market performance has, however, remained relatively stable over this period.
A.M. Best views the improving premium rate environment in the market favourably, with initial estimates putting increases for motor and residential property classes in the region of 2% to 3% for 2018. However, whilst price increases are anticipated to outpace inflation, they are unlikely to be sufficient to negate an adverse claims environment in lines such as motor, which has dragged the profitability of the sector in recent years.
A.M. Best anticipates insurers’ balance sheets will remain robust with resilient operating profits supplementing capital bases, and continued conservatism in asset allocations supporting risk-adjusted capitalisation. A.M. Best further notes that balance sheets are, in most instances, well protected from volatility stemming from peak risks. This is owing to the national natural catastrophe scheme provided by the national reinsurer, Caisse Centrale de Réassurance, which, albeit optional, presents the advantage of offering an unlimited state guarantee.
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