Non-Life insurers raise premiums

Fitch Ratings has said in a new report that it expects German non-life insurers to continue increasing premiums due to declining yields in their investment portfolios. Gross written premiums (GWP) for the sector are expected to grow two percent in 2017 and one percent in 2018 following an increase of around three percent in 2016, driven by higher pricing.

However, Fitch forecasts the average portfolio investment yield across the sector will decline to 3.2 percent in 2017 and three percent in 2018 from an estimated 3.5 percent in 2016 and 3.9 percent in 2015, reflecting persistently low yields for new investments.

In the motor sector, GWP growth was stronger than expected in 2016 but underwriting profitability did not improve due to higher claims expenses despite price increases. Motor insurers will need to focus on underwriting discipline and higher premiums in 2017, but benign claims experience could lead to premiums reductions in 2018.

According to the German regulator, non-life insurers had an average Solvency II ratio of 289 percent at end-2016, slightly up from 278 percent at by the end of 2015. These figures are mostly calculated without Solvency II transitional measures. Fitch expects German non-life insurers to maintain strong capitalisation, with an average Solvency II ratio above 250 percent by the end 2017.