Market Overview

A.M. BestTV: European Insurers Face a Three-Sided Risk Front, Say A.M. Best Analysts


In this A.M.BestTV episode, Greg Carter, managing director,
analytics, Catherine Thomas and Mahesh Mistry, both senior directors,
analytics, A.M. Best, said insurers in Europe's insurance markets
face a mixture of economic risks, which are tied to interest rates,
inflation and geopolitical risks, as well as traditional insurance
underwriting risks. Click on
to view the entire program.

Presently, the analyst said, the largest concern for Europe's insurance
markets is Brexit.

"Brexit is really about the ability of insurers to conduct cross border
business in the European Union single market," said Thomas. "Lloyd's,
the London Market and other U.K. commercial insurers are really
concerned about losing that business. … Insurers have been putting
contingency plans in place and establishing EU subsidiaries that would
be able to continue to access business in the EU post-Brexit. Over the
last six months, insurers have really been accelerating those plans."

Mistry said, "The European insurance markets are extremely diverse.
Countries like Spain have exceptional combined ratios being produced by
insurers, and others, like the United Kingdom and France, have combined
ratios that are relatively marginal. The competition is there and
expected to remain."

Carter highlighted how Solvency II is encouraging mergers and

"This comes because of the diversification benefits companies receive in
their capital calculations under the Solvency II regime. Buying a
different book of business, a diversifying book of business can actually
reduce a company's overall capital needs without necessarily adding to
the bottom line," said Carter.

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