The French non-life insurance sector outlook has been revised by Fitch Ratings to stable from negative. A majority of French non-life insurer ratings should be affirmed over the next 12 to 24 months.
Pricing conditions and claims experience have started showing signs of improvement, as French non-life insurers experienced some recovery in their technical results in 2010. No material climate events occurred during the year, while at the same time the total cost of claims in the motor insurance sector stabilised.
Nevertheless, premium growth continued to be weak in 2010 and Fitch believes the French insurance industry is facing a number of challenges, which have been amplified by the financial crisis. The difficult economic environment has led to the emergence of low-cost offers that are more attractive to policyholders looking for less expensive and simpler insurance products.
Fitch considers the main risks to French non-life insurers’ ratings in the next 12-24 months to be a return of aggressive pricing policies, which would have a negative effect on the sector’s profitability, and a prolonged period of low financial returns. Should these trends materialise, this could exert negative pressure on French non-life insurers’ ratings and prompt a revision of the rating outlook to negative.
Source : Fitch Ratings
