Benjamin Serra, Moody's assistant vice president, analyst and author of the report, said: "Moody's considers that 2010 and 2011 will represent transition years for the French non-life industry. After a sharp deterioration of profits in 2009, P&C insurers have started to increase prices.
"However, given the high cost of climatic events thus far, and the continuous high level of attritional claims, Moody's expects combined ratios to remain high in 2010. Non-life rates will continue to increase over the coming quarters, which should ultimately allow insurers to report sounder combined ratios. However, this will not likely materialise before at least 12 months.”
It said that on average, French insurers face relatively modest risks in a low interest rate environment, due to low guarantees and their ability to lower the returns granted to policyholders.
However, competition limits this possibility and margins are generally likely to continue to decrease. Moody's said it expects a slowdown in the growth of traditional products sales after an exceptional year in 2009, and unit-linked sales will likely remain depressed.
Mr Serra added: "Moody's considers that the current and planned national legal changes, for example, those in the fiscal legislation, pension reform and long-term care reform, will bring further uncertainties for the French insurance industry, although there could be some positive opportunities. In the short-term, all insurers will suffer the negative implications of tax increases.”
The report also highlights that Solvency II may exert some pressure on P&C and health insurers, because of the expected need to hold higher levels of capital to cover long-tailed P&C risks and health risks. These changes may accelerate the existing trend toward consolidation, creating business opportunities for the largest players. Articel From ; http://www.moneyweb.co.za/mw/view/mw/en/page292516?oid=521136&sn=2009+Detail&pid=287226 For the latest updates PRESS CTR + D or visit Stock Market news Today
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