European insurance sector’s exposure to rising CRE risks is low, Fitch says

Written by Adam Cadle

04/03/2024

The European insurance sector’s exposure to the rising risks of commercial real estate (CRE) is low, at about 4% of assets, with most insurers facing minimal risk to capital or ratings from falling CRE valuations, Fitch Ratings has said.

Just under half of the exposure is direct. Indirect exposure is mostly through holdings of CRE sector equities and loans.

“Even severe CRE losses, whether unrealised or realised, would not have a material impact on the European insurance sector’s overall capital given the low average exposure, Fitch stated.

“We estimate that an arbitrary 50% write-down of all CRE exposures, direct and indirect, would erode less than 10% of the sector’s aggregate capital base.”

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