Non-life sector to remain unchanged: Fitch

Germany’s non-life insurers continue to demonstrate their resilience to natural catastrophe events, Fitch Ratings has said following its analysis of the 10 largest insurers’ 2021 accounting data published in April–June 2022.

The companies’ net combined ratios (net-of-reinsurance claims and expenses to net premiums) for 2021 were in line with our expectations, which included our estimates for losses from the severe floods in July 2021. Consequently, Fitch still estimates the 2021 net combined ratio for the sector as a whole to be around 96percent. This would continue the sector’s record of combined ratios consistently below 100 percent (indicating an underwriting profit), even in years with high natural catastrophe losses.

The forecast for the sector’s net combined ratio in 2022 is 93 percent, unchanged from the start of the year despite the storms that struck Germany in February 2022. The associated net claims is expected to be no more than EUR750 million, which would only add about 1pp to the net combined ratio – not enough for us to change our forecast.

The 10 companies’ weighted-average net combined ratio for 2021 was 97.4 percent, with only Provinzial, which was hit hardest by the German floods, reporting a ratio significantly over 100 percent. Reinsurance proved important for most of the companies, as evident in net combined ratios that were significantly below gross combined ratios. The pattern was different for companies focused on industrial insurance cover in global markets. These reported very strong gross combined ratios, indicating low claims, but weaker net combined ratios as most of the premiums for industrial cover are ceded to reinsurers.

The German Insurance Association (GDV) does not publish a net combined ratio for the market, but it estimates that the gross combined ratio for 2021 will be 102 percent, which would indicate a substantial underwriting loss of about EUR1.5 billion before reinsurance recoveries.