French non-life insurance credit fundamentals to worsen in 2023

Written by Adam Cadle

28/11/2022

Credit fundamentals will worsen in the French non-life insurance sector while remaining broadly unchanged in life in the next 12 months, as insurers adapt to new market and macroeconomic regime, Fitch Ratings has said.

As a result, the ratings agency said its sector outlooks are deteriorating for non-life and neutral for life. Fitch expects French insurers’ ratings to be resilient to a moderate deterioration in market and macroeconomic conditions, given their strong capital strength and business diversification. However, it argued that ratings headroom on some credits may still not be sufficient to absorb a severe downside scenario.

In non-life, Fitch said it expects lower earnings, driven by lower technical profitability, partly offset by better investment income. In life and savings, Fitch said rising rates are supportive of technical margins on general accounts reserves but will not lead to a meaningful improvement in profitability for several years.

“Lower assets under management could also reduce unit-linked management fee,” it added.

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