‘Strong’ ALM programmes aid France’s non-life SCR ratio

Written by Adam Cadle

26/04/2021

France’s non-life insurance segment SCR ratio decreased only slightly in 2020 to 265%, down from 270% at year-end 2019, due in part to "strong ALM programmes" that limit the impact of interest rate movements, AM Best has said.

According to AM Best’s latest market segment outlook into France’s non-life insurance market, the small change in SCR ratios also reflects the segment’s modest allocation to equity, which was around 3.7% in September 2020.

A consequence of the low interest rate environment has been to drive some insurers to revise their investment allocations, taking on more risk in their search for yield. Revised allocations have generally increased the segment’s exposure to equity, real estate and alternative investments.

AM Best said the French non-life insurance segment has a track record of steady growth. The segment grew by 1.2% in 2020, despite the effects of the COVID-19 pandemic and subsequent recession. The resilience of the segment, and a return to economic growth in 2021 is expected to support stronger premium growth over the current year.

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