2021 Italian life sector outlook worsening

Written by Adam Cadle

01/12/2020

The outlook for Italian insurance in 2021 is worsening for the life sector and stable for the non-life sector, Fitch Ratings has said.

The worsening life sector outlook for the Italian insurance market reflects the negative impact of ultra-low interest rates, sensitivity to credit spreads and the pandemic-related market volatility on insurers' capitalisation in 2021.

"Reinvestment yields should further fall, rendering asset-liability management (ALM) more difficult for life insurers," Fitch Ratings said. "New business mix should remain tilted towards traditional life policies offering very low to zero capital guarantee."

The stable non-life sector outlook reflects Fitch's expectation that the claims frequency will continue to remain low as further lockdown measures are implemented in 2021.

The rating outlook for Italian insurers is stable, reflecting the sector's resilience to the pandemic impact and the stable outlook of Italy's sovereign. Italian sovereign debt represents a large portion of Italian insurers' investments. Italian insurers' rating distribution is spread across the 'A-' to 'BBB-' range.

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