The French insurance sector rebounded in 2013, posting a 3.7% increase in gross premium written (GPW), after two straight years of decline, according to a new A.M. Best special report.
The Best's Special Report, titled, "France's Insurance Market Rebounds Despite Ongoing Economic Weakness," states that the rebound in 2013 followed a decline in GPW of 4.3% in the previous year that came on top of a sharp 8.5% reduction in 2011. The 2013 turnaround was driven by increases in life and savings premiums, and the accident and health sector. Unlike other major European economies such as Germany and Spain, which have a more even split between life and non-life, life accounts for roughly two-thirds of France's insurance market.
The insurance sector showed signs of further recovery in the first five months of 2014, with total GPW rising 1.8%. However, uncertainty over tax treatment for life insurance products and pressure on insurers' profitability as a result of the low interest rate environment, as well as the more stringent capital requirements expected under Solvency II, have created significant challenges for the industry.
"French consumers have shown less of an appetite for life products, despite their favourable tax treatment, following the eurozone crisis and subsequent volatility in the financial markets. Instead, they have shown a preference to invest in savings products offering greater security while remaining fully liquid, such as 'Livret A,'" said Ghislain Le Cam, an associate director of analytics. "In 2013, the yield on 'Livret A' was revised downward, making it a less attractive savings vehicle. This, along with the recovering financial markets, has helped to buoy the life sector again."
Other key findings in the report include:
- Life net premium collection (the difference between premiums collected and benefits served) returned to positive territory in 2013 after a first-ever net negative collection of EUR 6.5 billion in 2012. The level of net premium collection for the first eight months of 2014 (EUR 15.3 billion) is approximately 50% higher compared with the same period in 2013.
- The non-life sector exhibited lacklustre growth in 2013, but reached a record level of EUR 50.3 billion in premiums, compared with EUR 49.4 billion in 2012. Increased competition and the impact of a weak economy on the volume of insurable goods put pressure on profitability for the sector, resulting in a net combined ratio of 101.9% in 2013 compared with 100.9% in 2012. This trend of diminishing growth has continued in the first five months of 2014, when the non-life sector grew by just 1.5%.
To access a complimentary copy of this special report in English and French, please visit: http://www3.ambest.com/bestweek/purchase.asp?record_code=229610.
The report is being released in advance of A.M. Best's 2014 Insurance Market Briefing Europe that is scheduled for Oct. 15, 2014, at the Grange St. Paul's Hotel in London. To register, or to learn more about the event, please visit www.ambest.com/conferences/imbe. In addition, a special report on the major European insurance markets, which includes this France market review, along with ones on the U.K., German and Spanish markets, will be made available on www.ambest.com the day of the event.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
Contacts:
A.M. Best Company
Ghislain Le Cam, CFA, +(44) 20 7397 0268
Associate Director, Analytics
ghislain.lecam@ambest.com
or
Mahesh Mistry, +(44) 20 7397 0325
Director, Analytics
mahesh.mistry@ambest.com
or
Christopher Sharkey, +(1) 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +(1) 908 439 2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
