Italian life insurance sector neutral but non-life sector ‘deteriorating’ – Fitch

Written by Michael Griffiths

01/12/2021

The outlook for the Italian insurance in 2022 is neutral for the life sector and deteriorating for the non-life sector, Fitch Ratings has stated.

According to the credit rating agency, the sector outlook considers underlying fundamentals expected in 2022 relative to actual fundamentals in 2021.

Fitch suggested the neutral life sector outlook for the Italian insurance market reflects its expectation of the continued negative impact of ultra-low interest rates, a high sensitivity to credit spreads, as well as strong unit-linked flows in 2022.

“Profitability should remain strong and resilient in 2022, despite investment margins remaining under pressure,” Fitch said. “Capitalisation will also remain very strong as Italian insurers continue to push for hybrid products and progressively reduce their exposure to Italian government bonds.”

Fitch also stated that its deteriorating outlook for the non-life sector reflects an expectation that the pandemic-related reduction in claims frequency will cease as mobility recovers to pre-pandemic levels, particularly in motor insurance.

The credit rater added: “We expect growth in non-motor business to continue in 2022, in particular for health insurance, as the pandemic led to more people reconsidering their individual health insurance needs.”

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