LONDON--(BUSINESS WIRE)--AM Best is maintaining a stable market segment outlook on the Spanish non-life insurance market, supported by key factors that include 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.
A new Best’s Market Segment Report, titled “Market Segment Outlook: Spanish Non-Life”, states the Spanish insurance market has shown resilient performance, producing solid underwriting results despite competitive market conditions and slowing economic growth. 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.
After gross domestic product growth peaked at 3.6% in 2015, the Spanish economy has been slowing down, nevertheless remains resilient. In this context, Spanish non-life gross written premium grew by 4% to EUR 35.4 billion in 2018. The segment’s expansion was primarily driven by the growth of the health business, which increased by 5.6%, much higher than the 1.9% observed for the motor segment. AM Best 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.
In the face of various pressures, the Spanish insurance market continues to display strong credit fundamentals. In spite of past political turmoil, the financial markets have remained resilient, with limited volatility in spreads of government bond yields observed over the last couple of years. Furthermore, the non-life insurance segment 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%
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