OLDWICK, N.J.--(BUSINESS WIRE)--In this A.M.BestTV episode, Greg Carter, managing director, analytics, Catherine Thomas and Mahesh Mistry, both senior directors, analytics, A.M. Best, said insurers in Europe’s insurance markets face a mixture of economic risks, which are tied to interest rates, inflation and geopolitical risks, as well as traditional insurance underwriting risks. Click on http://www.ambest.com/v.asp?v=europeanmarket818 to view the entire program.
Presently, the analyst said, the largest concern for Europe’s insurance markets is Brexit.
“Brexit is really about the ability of insurers to conduct cross border business in the European Union single market,” said Thomas. “Lloyd's, the London Market and other U.K. commercial insurers are really concerned about losing that business. … Insurers have been putting contingency plans in place and establishing EU subsidiaries that would be able to continue to access business in the EU post-Brexit. Over the last six months, insurers have really been accelerating those plans.”
Mistry said, “The European insurance markets are extremely diverse. Countries like Spain have exceptional combined ratios being produced by insurers, and others, like the United Kingdom and France, have combined ratios that are relatively marginal. The competition is there and expected to remain.”
Carter highlighted how Solvency II is encouraging mergers and acquisitions.
“This comes because of the diversification benefits companies receive in their capital calculations under the Solvency II regime. Buying a different book of business, a diversifying book of business can actually reduce a company’s overall capital needs without necessarily adding to the bottom line,” said Carter.
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