The evolution of the credit quality of French non-life insurers will reflect the cyclical downturn expected to kick in during 2005, said Fitch Ratings.
It said the downturn was expected to be less sharp than in the past, due to insurers greater drive to maintaining their underwriting balance, reflecting the structurally lower investment yields, cost pressures of reinsurance, and the upcoming implementation of new financial reporting and solvency standards.
Fitch said it was maintaining its positive outlook for the French non-life sector, reflecting its expectations that rating downgrades will be less likely than rating upgrades within the next 12 to 24 months.
Fitch said French non-life insurers will face a renewed price war as the trend of rising premiums comes to an end over the next two years.
In the absence of major claims, Fitch predicted excess underwriting capacity would encourage insurers to pursue more aggressive pricing policies in a bid to capture market share, even at the risk of a deterioration in their underwriting results.
A copy of the report, ‘Non-Life Insurance in France: Prospects and Challenges' is available from the Fitch website, www.fitchratings.com.
