Germany’s non-life insurers net combined ratios for 2021 is around 96%, according to a recent Fitch Ratings analysis.
According to the agency, this percentage would continue the sector’s record of combined ratios consistently below 100% (indicating an underwriting profit), even in years with high natural catastrophe losses.
Fitch said: “The companies’ net combined ratios (net-of-reinsurance claims and expenses to net premiums) for 2021 were in line with our expectations, which included our estimates for losses from the severe floods in July 2021.”
The forecasted 2022 net combined ratio for the sector is 93%, Fitch added. A percentage that remains unchanged from the start of the year despite the storms that struck Germany in February 2022.
Fitch said: “We expect the associated net claims to be no more than EUR750 million, which would only add about 1pp to the net combined ratio – not enough for us to change our forecast.”
The 2021 July floods were one of Germany’s largest natural catastrophe events ever, the agency noted.
It explained: “At the time, we estimated that insured losses from the floods could add up to 5pp to the sector’s net combined ratio for 2021, but we still expected the ratio to be below 100% given below-average claims from non-catastrophe insurance in 1H21.”
After analysing the 10 largest insurers’ 2021 accounting data published in April-June 2022, Fitch expectations were confirmed.
The 10 companies’ weighted-average net combined ratio for 2021 was 97.4%, with only Provinzial, which was hit hardest by the floods, reporting a ratio significantly over 100%.
The rating agency highlighted that reinsurance proved important for most companies, as evident in net combined ratios that were significantly below gross combined ratios.
According to Fitch, the pattern was different for companies focused on industrial insurance cover in global markets.
These reported very strong gross combined ratios, indicating low claims, but weaker net combined ratios as most of the premiums for industrial cover are ceded to reinsurers.
Following this analysis, Fitch estimates a gross combined ratio of 100% for 2021, similar to the 102% estimated by the German Insurance Association (GDV) – who does not publish a net combined ratio for the market.
The GDV gross combined ratio, Fitch explained, indicates a substantial underwriting loss of about EUR1.5 billion before reinsurance recoveries.
