Fitch Ratings has held its stable outlook on the German non-life insurance market for 2021, noting an expectation for underwriting discipline to be maintained and for insurers to achieve further premium growth in commercial lines.
The ratings agency forecasts premiums to grow 3% in 2020 and 2% in 2021, driven by a hardening market in commercial insurance and underwriting discipline in buildings insurance.
Non-life insurers are reported to have strengthened underwriting discipline since investment yields declined.
Fitch expects this trend to continue throughout 2021 and for there to be stable underwriting profit in 2021, with a market-wide combined ratio stable at around 94%, assuming average claims from natural catastrophe activity.
While there’s an expectation for a hardening market in commercial insurance and strong premium growth in the buildings line, Fitch says the motor line will likely report stable premium income only because 2020’s strong underwriting profitability increases competition and new business rates are likely to decline for motor.
Due to motor’s low premium growth Fitch expects market growth to slow to 2% in 2021 from 3% in 2020.
Lastly, Fitch has revised its rating outlook for the German non-life insurance market to negative from stable as the likelihood for downgrades within the sector has increased in recent months.
This is driven by a significant number of Fitch’s ratings benefitting from ownership support of banking groups whose rating outlooks have been revised to Negative during 2020.
However, all of Fitch’s rating outlooks remain stable for German non-life insurers whose ratings do not benefit from ownership support.
