2018 Insurance Market Briefing - UK Non-Life Outlook. 2018 Insurance Market Briefing - France 3 April

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  • 2018 Insurance Market Briefing - France

    Hôtel Napoléon

    3 April 2018

  • 2018 Insurance Market Briefing - France

    2018 Insurance Market Briefing - France 3 April 2018 2

    Welcome

    Nick Charteris-Black Managing Director, Market Development – EMEA

    William Mills Director, Market Development

  • Agenda

    2018 Insurance Market Briefing - France 3 April 2018 3

    14:10 Keynote Speech: New Battles for Insurers Xavier Ducurtil, Directeur Marketing Stratégique du groupe Covéa

    14:50 Thematic Session: European Insurance Market Segment Outlooks: What to Expect in 2018 Alex Rafferty, Senior Financial Analyst

    15:20

    15:40 Thematic Session: Stormy Year, Placid Market? A Review of the Reinsurance Sector

    Ghislain Le Cam, Director, Analytics

    16:10 Best’s Credit Rating Methodology (BCRM): Benchmark Analysis 6 Months On

    Charlotte Vigier, Senior Financial Analyst

    17:00

  • Disclaimer

    2018 Insurance Market Briefing - France 3 April 2018 4

    © AM Best Company (AMB) and/or its licensors and affiliates. All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT AMB’s PRIOR WRITTEN CONSENT. All information contained herein is obtained by AMB from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no circumstances shall AMB have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of AMB or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if AMB is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities, insurance policies, contracts or any other financial obligations, nor does it address the suitability of any particular financial obligation for a specific purpose or purchaser. Credit risk is the risk that an entity may not meet its contractual, financial obligations as they come due. Credit ratings do not address any other risk, including but not limited to, liquidity risk, market value risk or price volatility of rated securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY AMB IN ANY FORM OR MANNER WHATSOEVER. Each credit rating or other opinion must be weighed solely as one factor in any investment or purchasing decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security or other financial obligation and of each issuer and guarantor of, and each provider of credit support for, each security or other financial obligation that it may consider purchasing, holding or selling.

  • Disclaimer

    2018 Insurance Market Briefing - France 3 April 2018 5

    US Securities Laws explicitly prohibit the issuance or maintenance of a credit rating where a person involved in the sales or marketing of a product or service of the CRA also participates in determining or monitoring the credit rating, or developing or approving procedures or methodologies used for determining the credit rating.

    No part of this presentation amounts to sales / marketing activity and A.M. Best’s Rating Division employees are prohibited from participating in commercial discussions.

    Any queries of a commercial nature should be directed to A.M. Best’s Market Development function.

  • 2018 Insurance Market Briefing - France

    2018 Insurance Market Briefing - France 3 April 2018 6

    Alex Rafferty Senior Financial Analyst

    Thematic Session: European Insurance Market

    Segment Outlooks: What to Expect in 2018

  • Discussion Outline

    2018 Insurance Market Briefing - France 3 April 2018 7

    What is a Segment Outlook?

    A Challenging Operating Environment for European Insurers

    European Segment Outlooks

    Looking Forward

  • 2018 Insurance Market Briefing - France 3 April 2018 8

    What is a Segment Outlook?

  • Market Segment Outlooks

    2018 Insurance Market Briefing - France 3 April 2018 9

     Examine the current trends in particular segments of the insurance industry over the next 12 months

     Typical factors considered include current and forecast economic conditions; the regulatory environment and potential changes; emerging product developments; and competitive issues that could impact the success of the companies operating in the segment

     A Best’s Market Segment Outlook, like a Best’s Credit Rating Outlook for a company, can be positive, negative, or stable

     Many segments covered internationally

  • European Segment Outlooks

    2018 Insurance Market Briefing - France 3 April 2018 10

    A.M. Best has a Stable Outlook

    France – Non-Life

    A.M. Best has a Negative Outlook

    UK – Non-Life

    A.M. Best has a Stable Outlook

    Spain – Non-Life

    A.M. Best has a Stable Outlook

    Italy – Non-Life

    A.M. Best has a Stable Outlook

    Germany – Non-Life

  • 2018 Insurance Market Briefing - France 3 April 2018 11

    A Challenging Operating Environment for European

    Insurers

  • European Overview

    2018 Insurance Market Briefing - France 3 April 2018 12

     Operating environment has proved challenging with limited growth prospects and low investment returns

     Insurers have maintained strong balance sheets, with resilient operating performance, and appropriate enterprise risk management (ERM)

     Persisting headwinds…  Regulatory risks  Political risks  Historically low interest rates

     … and encouraging signs:  Improving economic outlook  Indications of modest interest rate rises

  • A Context of Economic Recovery

    2018 Insurance Market Briefing - France 3 April 2018 13

    e = estimate p = projection Source: International Monetary Fund

    Period of economic recovery, expected to moderate

    -3%

    -2%

    -1%

    0%

    1%

    2%

    3%

    4%

    2010 2011 2012 2013 2014 2015 2016e 2017e 2018p 2019p

    GDP Growth 2010 - 2019 France UK Spain Italy Germany Eurozone

  • A Context of Economic Recovery

    2018 Insurance Market Briefing - France 3 April 2018 14

    Increased economic activity with lower unemployment

    Note: *Data as at January 2018, **Data as at November 2017 Source: Europa.eu

    5.2% 7.6%

    12.0% 10.3% 12.1%

    26.1%

    3.6% 4.3%

    8.6% 9.0% 11.1%

    16.3%

    Germany* UK** Eurozone* France* Italy* Spain*

    Unemployment, Selected Countries 2013 2018

  • Challenging Interest Rate Environment

    2018 Insurance Market Briefing - France 3 April 2018 15

    Notes: Percentages per annum; period averages Source: European Central Bank – Long Term Interest Rate for Convergence Purposes

    Historical low interest rate environment persists

    -1

    0

    1

    2

    3

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    20 10

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    20 10

    Ju l

    20 11

    Ja n

    20 11

    Ju l

    20 12

    Ja n

    20 12

    Ju l

    20 13

    Ja n

    20 13

    Ju l

    20 14

    Ja n

    20 14

    Ju l

    20 15

    Ja n

    20 15

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    Ja n

    20 16

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    20 17

    Ja n

    20 17

    Ju l

    20 18

    Ja n

    %

    European Union - Yields of Government Bonds With Maturities Close to 10 Years (2010-18)

    France UK Spain Italy Germany

  • Rising Political Uncertainty

    2018 Insurance Market Briefing - France 3 April 2018 16

    Catalonia Referendum

    Brexit

    Italian Elections

    German Elections

    French Elections

    Populist Rise

    US Elections

    Increased uncertainty in political landscape

  • 2018 Insurance Market Briefing - France 3 April 2018 17

    European Segment Outlooks

  • European Segment Outlooks