Outlook for French P&C sector negative for 2018: Moody's

Against a backdrop of intense competition hindering the industry's ability to raise prices, the outlook for the French property and casualty insurance sector is negative, according to a Moody's Investors Service report, published November 29.

Motor insurance at the underwriting level will remain unprofitable, and overall P&C combined ratios will remain around 100 percent, leaving insurers vulnerable to any deterioration in claims trends.

Furthermore, Moody's expects investment income - P&C insurers' main source of profit at this time - to continue to decline because of still low interest rates.

However, insurers will not have to adjust the discount rate of their motor annuity reserve due to the recent rise in interest rates.

"French P&C insurers will raise prices at a slightly faster pace than in previous years, notably in the motor segment, but the increase in prices will barely offset claims inflation because of intense competition," said Benjamin Serra, vice president and senior credit officer at Moody's. "As a consequence, P&C profits will remain fragile."

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