Competition and concentration key for European non-life: ratings agency

Most European countries have relatively stable non-life insurance segments, which, although competitive, are technically profitable for the market overall, according to a report from global credit rating agency AM Best.

The Best’s Market Segment Report report, European Insurers: Concentration, Competition and Markets Remain Key, states that the primary focus of Europe’s largest non-life insurers continues to be on their local markets, with most focused on the retail segments, and in particular, the personal lines business. Although some European countries are currently experiencing a level of economic and political instability, insurers have strategies in place for managing this environment.

This stability is mirrored in AM Best’s ranking of the largest 30 non-life insurers, with no new entrants into the ranking and no movements in the positions of the top five players. Allianz remained in the number one spot, followed by Lloyd's, AXA, Chubb and Zurich Insurance Group. Lower down the ranking, most entities have moved up or down by only one position.

Mathilde Jakobsen, director, analytics at the agency, said: “The gross premiums written of the five largest insurers in this ranking has been largely stable at just under 50 percent. When we look at the largest 10, we note that the proportion of premiums accounted for by them is also unchanged at 70 percent. Despite this concentration, most European insurance segments are experiencing a relatively strong level of competition. Furthermore, each market has its own idiosyncrasies, with product and distribution channel mix dictated by the history and culture of each particular country, with some of the groups underwriting the majority of their insurance portfolios in their country of domicile.”

The report also looked at the regulatory solvency positions of the largest 30 European non-life insurers for 2018 and 2017. Angela Yeo, senior director, analytics and head of operations - analytics at the agency, added: “Of the groups for which Solvency II ratios are available, only a handful have ratios below 170 percent and more than half have ratios above 200 percent, illustrating the strong solvency position of the European insurance sector. The highest ratios tend to be held by mutual groups, which do not have to consider return on equity for shareholders, and by those underwriting reinsurance and large corporate risks, where strong solvency is a competitive advantage.”

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