The Spanish non-life insurance sector has expanded for the fifth year in a row, with strong profitability maintained and many opportunities for further growth, according to analysts at Fitch Ratings.
In 2018, Spanish non-life premiums increased by 4% with positive contributions from most lines.
Fitch expects the Spanish non-life insurance sector to continue growing in line with or slightly bove GDP in 2019 to 2020.
However, growth is expected to slow down due to a decline in private consumption, as well as a decrease in demand for motor insurance as car sales decline.
Analysts predict the market should maintain strong technical profitability and a combined ratio of around 95% next year, compared to 93.7% in 2018.
The non-life sector also reflects positive trends in the Spanish insurance market more broadly, which is benefiting from healthy profits in both life and non-life sectors, robust capitalisation, and sound reserving and investment practices, according to Fith.
The country also offers significant opportunities for growth given the insurance penetration rate of just 5.5%, which is lower than in other developed economies.
Return on equity (RoE) for the insurance sector has averaged 13% over the last 10 years, although returns have been more modest in recent years, as persistent low interest rates have depressed investment returns.
Fitch also noted that the industry boasts a Solvency Capital Requirement (SCR) coverage ratio of 239%, one of the strongest in Europe.
