Post on 14-Jul-2020
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-BlackManaging Director, Market Development – EMEA
William MillsDirector, Market Development
Agenda
2018 Insurance Market Briefing - France 3 April 2018 3
14:10 Keynote Speech: New Battles for InsurersXavier Ducurtil, Directeur Marketing Stratégique du groupe Covéa
14:50 Thematic Session: European Insurance Market Segment Outlooks: What to Expect in 2018Alex 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 BYCOPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHERTRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCHPURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT AMB’s PRIORWRITTEN CONSENT. All information contained herein is obtained by AMB from sources believed by it to be accurate and reliable. Because of thepossibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of anykind. 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 anysuch information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lostprofits), 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 creditratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must beconstrued 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 THEACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OROTHER OPINION OR INFORMATION IS GIVEN OR MADE BY AMB IN ANY FORM OR MANNER WHATSOEVER. Each credit rating or other opinionmust 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, andeach such user must accordingly make its own study and evaluation of each security or other financial obligation and of each issuer and guarantor of, andeach 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 thesales or marketing of a product or service of the CRA also participates in determining or monitoring the credit rating, ordeveloping 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 employeesare 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 RaffertySenior 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 aStable Outlook
France – Non-Life
A.M. Best has aNegative Outlook
UK – Non-Life
A.M. Best has aStable Outlook
Spain – Non-Life
A.M. Best has aStable Outlook
Italy – Non-Life
A.M. Best has aStable 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 = projectionSource: 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 - 2019FranceUKSpainItalyGermanyEurozone
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 2017Source: 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 Countries2013 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
4
5
6
7
8
2010
Jan
2010
Jul
2011
Jan
2011
Jul
2012
Jan
2012
Jul
2013
Jan
2013
Jul
2014
Jan
2014
Jul
2015
Jan
2015
Jul
2016
Jan
2016
Jul
2017
Jan
2017
Jul
2018
Jan
%
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
2018 Insurance Market Briefing - France 3 April 2018 18
A.M. Best has aStable Outlook
France – Non-Life
A.M. Best has aNegative Outlook
UK – Non-Life
A.M. Best has aStable Outlook
Spain – Non-Life
A.M. Best has aStable Outlook
Italy – Non-Life
A.M. Best has aStable Outlook
Germany – Non-Life
France Non-Life Outlook
2018 Insurance Market Briefing - France 3 April 2018 19
A.M. Best Has A Stable Outlook
Resilient performance driven by generally good diversification of business profiles in the face of intense competition and challenging market conditions
Headwinds
Ongoing intense competition
Weak technical equilibrium
Inflationary claims trends in motor
Tailwinds
Favourable pricing indicators
Business mix generally well balanced
Source: FFA; Les Echos
99% 98%
90%
95%
100%
105%
110%
2012 2013 2014 2015 2016
Non-Life Combined Ratio
Non-lifemarketProperty -IndividualProperty -CommercialMotor
Germany Non-Life Outlook
2018 Insurance Market Briefing - France 3 April 2018 20
A.M. Best Has A Stable Outlook
Sector exhibits solid technical profitability, underpinned by good underwriting discipline and sustainable rate adjustments, and very strong balance sheets
Headwinds
Increasingly competitive market conditions
Protectionist tendencies could adversely impact Germany’s export driven economy
TailwindsSolid technical profitability, with good underwriting discipline
Solid economic fundamentals
Sustainable rate increasesSource: Best’s Statement File – Global, A.M. Best data and research; GDV.
97% 95%90%95%
100%105%110%115%120%
2012 2013 2014 2015 2016
Non-Life Combined Ratio
Non-lifemarketProperty
Motor
Liablity
286%
287%
2016
2015
SCR
Spain Non-Life Outlook
2018 Insurance Market Briefing - France 3 April 2018 21
A.M. Best Has A Stable Outlook
Insurers demonstrate solid technical fundamentals, with good performance and strong balance sheets, although sustained political instability could test the sector
Headwinds
Political instability following Catalonia independence referendum
Adapting to regulatory reforms
TailwindsSustained strong technical performance
Economic recovery to support premium growth
Strengthened ERMSource: El Mundo; FFA; GDV; A.M. Best calculations on ANIA data; ANIA; DGSFP
94% 93%
90%92%94%96%98%
100%102%104%
2012 2013 2014 2015 2016
Selected Countries –Non-Life Combined Ratio
France
Spain
Italy
Germany
Italy Non-Life Outlook
2018 Insurance Market Briefing - France 3 April 2018 22
A.M. Best Has A Stable Outlook
The stable outlook reflects the sector’s ability to maintain strong technical profitability in spite of competitive pressures and political uncertainty
Headwinds
Strong competition putting pressure on rates for motor (50% of non-life market)
Political instability
Economic fundamentals
Tailwinds
Strong technical profitability
Underwriting discipline supported by increased use of telematics
Source: A.M. Best calculations on ANIA data; ANIA; GDV, FFA; DGSFP
96%94%
90%92%94%96%98%
100%102%104%
2012 2013 2014 2015 2016
Selected Countries –Non-Life Combined Ratio
France
Spain
Italy
Germany
20,224 18,676 17,598 16,674 16,160
85%
90%
95%
100%
- 5,000
10,000 15,000 20,000 25,000
2012 2013 2014 2015 2016
Motor Gross Written Premium and Combined Ratio
Motor GWP Motor Combined Ratio
UK Non-Life Outlook
2018 Insurance Market Briefing - France 3 April 2018 23
A.M. Best Has A Negative Outlook
Competitive conditions, legislative uncertainty and the potential impact of Brexit on the UK economy weigh on the segment
HeadwindsEconomic uncertainty
Intense competition; weak technical margins
Volatility in prior year reserve development
Legislative uncertainty
Tailwinds
Implementation of Civil Liability Bill, with potential whiplash and personal injury claims reform
Note: Accident Year Combined RatiosSource: Best’s Statement File – Global, A.M. Best Data and Research; Insurance Times
102%98%
110% 112%113%
104%
95%
105%
115%
125%
135%
2012 2013 2014 2015 2016
Accident Year Combined Ratio (Selected Lines)
Property Motor Liability
2018 Insurance Market Briefing - France 3 April 2018 24
Looking Forward
Key things to watch…
2018 Insurance Market Briefing - France 3 April 2018 25
Competition to continue to strain technical margins, pricing
Ongoing focus on cost management, as insurers aim to preserve bottom lines in highly competitive markets and low investment return environment
Economic environment will present some opportunities for insurers, although dramatic growth not anticipated
Key things to watch…
2018 Insurance Market Briefing - France 3 April 2018 26
Increasing focus on, and investment in, innovation and customer experience
Key things to watch…
2018 Insurance Market Briefing - France 3 April 2018 27
Political Uncertainty
GDPR
IFRS17Legislative Reforms
Distribution Directive
External challenges persist
Brexit
2018 Insurance Market Briefing -France
2018 Insurance Market Briefing - France 3 April 2018 28
Thematic Session: Stormy Year, Placid Market?
A Review of the Reinsurance Sector
Ghislain Le CamDirector, Analytics
Discussion Outline
2018 Insurance Market Briefing - France 3 April 2018 29
Global Reinsurance Results and Trends
Market Capacity
Global Market Developments & Evolution
Reinsurance Sector Outlook
Plus ça change…
2018 Insurance Market Briefing - France 3 April 2018 30
Negative interest rates
The United States, the world’s largest economy, has debt/GDP over 100%
The United Kingdom voted to leave the European Union
Terrorism seems to be rampant around the world
Housing bubbles in many parts of the world
Stock Markets are hovering near all-time highs
…plus c’est la même chose
2018 Insurance Market Briefing - France 3 April 2018 31
Global ReinsuranceResults and Trends
Global Combined Ratio
2018 Insurance Market Briefing - France 3 April 2018 32
60.1% 55.9% 56.2% 56.0% 60.5%
76.1%
61.0%
31.6% 31.9% 33.6% 34.3%34.7%
33.7%
33.6%
6.3% 5.7% 5.4% 6.0% 5.8%4.2% 5.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0%
20%
40%
60%
80%
100%
120%
2012 2013 2014 2015 2016 2017 5yr Avg
Expense Ratio
Loss Ratio
Loss ReserveDevelopment
Source: A.M. Best data and research, preliminary numbers
Combined Ratio by Reinsurance Sector
2018 Insurance Market Briefing - France 3 April 2018 33
Source: A.M. Best data and research, preliminary numbers
91% 87% 88% 90%98%
114%
2012 2013 2014 2015 2016 2017
European “Big Four” U.S. & Bermuda Lloyd’s
93%87% 87% 91% 92%
108%
2012 2013 2014 2015 2016 2017
91% 89% 92% 92% 96%109%
0%
20%
40%
60%
80%
100%
120%
2012 2013 2014 2015 2016 2017
Loss Ratio Expense Ratio
Global Return on Equity
2018 Insurance Market Briefing - France 3 April 2018 34
Source: A.M. Best data and research, preliminary numbers
12.4% 13.0%11.6%
9.8%8.4%
-0.1%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
2012 2013 2014 2015 2016 2017
Return on Equity Five-Year Average
Return on Equity by Reinsurance Sector
2018 Insurance Market Briefing - France 3 April 2018 35
Source: A.M. Best data and research, preliminary numbers
European “Big Four” U.S. & Bermuda Lloyd’s
13.0% 13.1%11.0% 11.5%
9.7%
2.7%
0%
5%
10%
15%
20%
2012 2013 2014 2015 2016 2017
10.4%11.4%
10.8%8.0% 7.0%
0.2%
2012 2013 2014 2015 2016 2017
15.1% 16.2%14.7%
8.9% 8.1%
-7.3%
2012 2013 2014 2015 2016 2017
Five-Year Average
2017
Global Return on Equity – Five Year Average at Year End 2017
2018 Insurance Market Briefing - France 3 April 2018 36
Source: A.M. Best data and research, preliminary numbers
8.5%
4.7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Five -Year Average Returnon Equity
Five -Year Average Returnon Equity Excluding Loss
Reserve Development
Global Operating Cash Flow (% of equity)
2018 Insurance Market Briefing - France 3 April 2018 37
Source: A.M. Best data and research, preliminary numbers
14.9%
10.1%
13.4%12.5% 12.6%
5.7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2012 2013 2014 2015 2016 2017
2018 Insurance Market Briefing - France 3 April 2018 38
Market Capacity
Top Reinsurance Groups
2018 Insurance Market Briefing - France 3 April 2018 39
Swiss Re Ltd. Munich Reinsurance Company Lloyd's Hannover Ruck SE Berkshire Hathaway Inc. SCOR S.E.Transatlantic Holdings, IncEverest Re Group Ltd. PartnerRe Ltd.XL Group plc
Top 10 Global Reinsurance Groups – Non-Life
Top 10 Global Reinsurance Groups – Life
Munich Reinsurance CompanySwiss Re Ltd. Reinsurance Group of America Inc.SCOR S.E.Hannover Ruck SEGreat West LifecoBerkshire Hathaway Inc.Pacific LifeCorpPartnerRe Ltd.Assicurazioni Generali SpA
Source: A.M. Best data and research. Ranked by unaffiliated gross premium written in 2016
Life and Non-Life Reinsurance GPW Distribution by Ranking
2018 Insurance Market Briefing - France 3 April 2018 40
Rank 1-1068.6%
Rank 11-2016.0%
Rank 21-307.6%
Rank 31-405.0%
Rank 41-502.8%
Source: A.M. Best data and research. Ranked by unaffiliated gross premium written in 2016
Estimate for Total Dedicated Reinsurance Capacity (USD billions)
2018 Insurance Market Briefing - France 3 April 2018 41
Source: A.M. Best data and research and Guy Carpenter
292 320 340 332 345 345
19 48
60 68 75 82
2012 2013 2014 2015 2016 2017
ConvergenceCapacity
TraditionalCapacity
Convergence Capacity
2018 Insurance Market Briefing - France 3 April 2018 42
Source: A.M. Best data and research and Guy Carpenter
4 3 4 5 5
25 3441
49 5219
2323
2225
2013 2014 2015 2016 2017E*ILW Collateralized Re Catastrophe Bonds
Source: A.M. Best data and research and Artemis
0
10
20
30
40
50
60
70
0
2
4
6
8
10
12
14
Num
ber of Deals
USD
bill
ions
CAT Bonds Issued Number of Deals
Convergence Capacity (USD billions) Catastrophe Bonds Issued
Total Economic and Insured Losses
2018 Insurance Market Briefing - France 3 April 2018 43
Source: Swiss Re Institute
2017 2016
AnnualChange
(%)10-Year Average
% of 10-Year Average
Economic LossesEconomic Losses(USD billions)
Natural Catastrophe 300 178 69 178Man-made 6 10 -42 12
Economic Losses - Total 306 188 63 190Insured Losses(USD billions)
Natural Catastrophe 131 56 133 51 29Man-made 5 8 -45 7 58
Insured Losses - Total 136 65 110 58 31
Rate increases have remained moderate and account specific
2018 Insurance Market Briefing - France 3 April 2018 44
0%
50%
100%
150%
200%
250%
300%
350%
400%
US Asia - Pacific UK Europe Global
9/11 Attacks (01)
KRW* (05)
IKE (08)Japan EQ (11)
Andrew (92)
Sandy (12)
HIM** (17)
* Katrina, Rita, Wilma ** Harvey, Irma, MariaSource: A.M. Best data and research, Guy Carpenter & Co LLC
2018 Insurance Market Briefing - France 3 April 2018 45
GlobalMarket
Developments
London Market
2018 Insurance Market Briefing - France 3 April 2018 46
UK ILS Reform
Mergers & Acquisitions
Brexit Plans
Main M&A Deals
2018 Insurance Market Briefing - France 3 April 2018 47
Date Announced Acquirer Acquiree Price ($Mil) Price to BV Premium to last close
Jun-14 Validus Western World Insurance $690 1.33x N/A
Aug-14 Allied World Hong Kong operation of RSA $215 N/A N/ANov-14 RenRe Platinum Underwriters $1,900 1.13x 24%
Jan-15 XL Group Catlin Group Limited $4,100 1.61x 24%
Feb-15 Fairfax Brit $1,880 1.59x 11%
Mar-15 Endurance Montpelier Re $1,830 1.21x 19%
May-15 Fosun International Ltd Ironshore $2,304 N/A N/A
Aug-15 EXOR PartnerRe $6,900 1.10x 20%
Sep-15 Mitsui Sumitomo Amlin $5,300 2.40x 36%
Oct-16 Sompo Endurance $6,300 1.36x 43%
Dec-16 Fairfax Allied World $4,900 1.34x 18%
Dec-16 Liberty Mutual Ironshore $3,000 1.45x N/A
Jan-18 AIG Validus $5,560 1.53x 46%Mar-18 Axa XL Catlin $15,300 1.51x 33%
Brexit Plans
2018 Insurance Market Briefing - France 3 April 2018 48
Insurers Unveil Choices for European Offices
Source: A.M. Best data and research
Regulatory Changes
2018 Insurance Market Briefing - France 3 April 2018 49
Covered agreement
U.S. tax reform
Has regulation peaked?
Market Evolution
2018 Insurance Market Briefing - France 3 April 2018 50
Client Agent & Broker
Primary Insurance Company
Reinsurance Broker
Reinsurance Company
Convergence Capital
In A.M. Best’s opinion…
The market will continue to become more efficient as all players strive to become closer to the client
Evolving strategies
2018 Insurance Market Briefing - France 3 April 2018 51
Traditional Dual Platform
Controlthe client
Build primary business
Alternative Capital Platform
Manage or have a relationship with
alternative capital
Build fee income stream
Mergers &Acquisitions
Relevanceand size
Ability to be small and nimble with
parental protection
Potential Opportunities
2018 Insurance Market Briefing - France 3 April 2018 52
Cyber Insurance Flood Mortgage Terrorism InsurTech
2018 Insurance Market Briefing - France 3 April 2018 53
ReinsuranceOutlook
Negative Outlook Remains
2018 Insurance Market Briefing - France 3 April 2018 54
Although capitalisation remains strong and rate deterioration halted, pressure on margins continues
Over the intermediate term, returns for some reinsurers will fall short on a risk-adjusted basis
A.M. Best Maintains Negative Outlook
Headwinds
Intense competitionIncreasing interest from third party capital Earnings under pressureExcess capacity hinders improvementPotential for increased inflation
Tailwinds
Cession rates increasingCat losses temporarily stabilise ratesFavourable reserve developmentStrong risk-adjusted capitalIncrease in interest ratesM&A
2018 Insurance Market Briefing -France
2018 Insurance Market Briefing - France 3 April 2018 55
Charlotte VigierSenior Financial Analyst
Best’s Credit Rating Methodology (BCRM): Benchmark Analysis Six Months On
Interactive Rating Process
2018 Insurance Market Briefing - France 3 April 2018 56
Source: Best’s Credit Rating Methodology
BCRM Building Blocks
2018 Insurance Market Briefing - France 3 April 2018 57
Source: Best’s Credit Rating Methodology
BCRM Building Blocks
2018 Insurance Market Briefing - France 3 April 2018 58
Assessment
Strongest
Very Strong
Strong
Adequate
Weak
Very Weak
Assessment
Very Strong +2
Strong +1
Adequate 0
Marginal -1
Weak -2
Very Weak -3
Assessment
Very Favorable +2
Favorable +1
Neutral 0
Limited -1
Very Limited -2
Assessment
Very Strong +1
Appropriate 0
Marginal -1
Weak -2
Very Weak -3/4
BCRM Building Blocks – Balance sheet Strength
2018 Insurance Market Briefing - France 3 April 2018 59
Assessment
Strongest
Very Strong
Strong
Adequate
Weak
Very Weak
Mature European Companies –Balance Sheet Strength
2018 Insurance Market Briefing - France 3 April 2018 60
-20-10
01020304050607080
VaR 95% VaR 99% VaR 99.5% VaR 99.6% VaR 99.8%M
edia
n B
CAR
Sco
re
Strongest Very Strong Strong Adequate
Mature European Companies – Median BCAR Score by Balance Sheet Strength as at Oct 2017
Notes:Data comprise testing conducted on lead rating units before the introduction of the new BCRM on Oct. 13, 2017.
Best’s Capital Adequacy Ratio (BCAR) is one of the elements considered in the balance sheet strength assessment
VaR Confidence Level(%)
BCAR BCAR Assessment
99.6 >25 at 99.6 Strongest99.6 > 10 at 99.6 & ≤ 25 at 99.6 Very Strong99.5 > 0 at 99.5 & ≤ 10 at 99.6 Strong99 > 0 at 99 & ≤ 0 at 99.5 Adequate95 > 0 at 95 & ≤ 0 at 99 Weak95 ≤ 0 at 95 Very Weak
Mature European Companies –Balance Sheet Strength
2018 Insurance Market Briefing - France 3 April 2018 61
Strongest10%
Very Strong71%
Strong14%
Adequate5%
European Companies – Balance Sheet Strength Distribution
Notes:Data comprise both preliminary testing conducted on lead rating units before introduction of the new BCRM (Oct. 13, 2017) and actual rating committee outcomes to mid-March, 2018. Source: A.M. Best data and research
173 4
50
100
913 13
100 100
50
100
33
6773
7783
67
17 187
0
10
20
30
40
50
60
70
80
90
100
aa+ aa aa- a+ a a- bbb+ bbb bbb- bb+
(%)
Strongest Very Strong Strong Adequate
European Companies – Balance Sheet Strength by Long-Term Issuer Credit Rating
BCRM Building Blocks – Operating performance
2018 Insurance Market Briefing - France 3 April 2018 62
Assessment
Very Strong +2
Strong +1
Adequate 0
Marginal -1
Weak -2
Very Weak -3
Mature European Companies –Operating Performance
2018 Insurance Market Briefing - France 3 April 2018 63
Strong +137%
Adequate 057%
Marginal -16%
European Companies – Operating Performance Notch Distribution
186 4
1733
36 5872
100 100 100 10010083
67
4536
24
0
10
20
30
40
50
60
70
80
90
100
aa+ aa aa- a+ a a- bbb+ bbb bbb- bb+
(%)
Strong +1 Adequate 0 Marginal -1
European Companies – Operating Performance Notch by Long-Term Issuer Credit Rating
Notes:Data comprise both preliminary testing conducted on lead rating units before introduction of the new BCRM (Oct. 13, 2017) and actual rating committee outcomes to mid-March, 2018.Source: A.M. Best data and research
Mature European Companies –Operating Performance
2018 Insurance Market Briefing - France 3 April 2018 64
88
97
107
60
65
70
75
80
85
90
95
100
105
110
+1 0 -1
Strong Adequate Marginal
Med
ian
5-Yr
. Avg
. Com
bine
d R
atio
(%)
European Companies – 5-Year Average Combined Ratio by Operating Performance Notch
13
7
3
0
2
4
6
8
10
12
14
+1 0 -1
Strong Adequate Marginal
Med
ian
5-Yr
. Avg
. RO
E (%
)
European Companies – 5-Year Average ROE by Operating Performance Notch
Notes:Data comprise testing conducted on lead rating units before introduction of new BCRM (Oct. 13, 2017).Source: A.M. Best data and research
BCRM Building Blocks – Business Profile
2018 Insurance Market Briefing - France 3 April 2018 65
Assessment
Very Favorable +2
Favorable +1
Neutral 0
Limited -1
Very Limited -2
Mature European Companies –Business Profile
2018 Insurance Market Briefing - France 3 April 2018 66
Very Favorable +2
11%
Favorable +119%
Neutral 050%
Limited -120%
European Companies – Business Profile Notch Distribution
27
9
30 33
100
50
100
1733
3664
5967
100
17
17
2721
11
5067
50
0
10
20
30
40
50
60
70
80
90
100
aa+ aa aa- a+ a a- bbb+ bbb bbb- bb+
(%)
Very Favorable +2 Favorable +1 Neutral 0 Limited -1 Very Limited -2
European Companies – Business Profile Notch by Long-Term Issuer Credit Rating
Notes:Data comprise both preliminary testing conducted on lead rating units before introduction of the new BCRM (Oct. 13, 2017) and actual rating committee outcomes to mid-March, 2018.Source: A.M. Best data and research
Mature European Companies –Business Profile
2018 Insurance Market Briefing - France 3 April 2018 67
BCRM Building Blocks – Enterprise Risk Management
2018 Insurance Market Briefing - France 3 April 2018 68
Assessment
Very Strong +1
Appropriate 0
Marginal -1
Weak -2
Very Weak -3/4
Mature European Companies –Enterprise Risk Management
2018 Insurance Market Briefing - France 3 April 2018 69
Very Strong +1
10%
Appropriate 089%
Marginal -11%
European Companies – Enterprise Risk Management Notch Distribution
8
100
3350
9186 100 100 100 100 100
6750
9 6
0
10
20
30
40
50
60
70
80
90
100
aa+ aa aa- a+ a a- bbb+ bbb bbb- bb+
(%)
Very Strong +1 Appropriate 0 Marginal -1
European Companies – Enterprise Risk Management Notch by Long-Term Issuer Credit Rating
Notes:Data comprise both preliminary testing conducted on lead rating units before introduction of the new BCRM (Oct. 13, 2017) and actual rating committee outcomes to mid-March, 2018.Source: A.M. Best data and research
Mature European CompaniesICR Distribution (%)
2018 Insurance Market Briefing - France 3 April 2018 70
Source: Best’s Credit Rating Monitor
1
3
5
17
23
29
21
1 1 11
3
11 11
22
28
21
1 1 1
aaa aa+ aa aa- a+ a a- bbb+ bbb bbb-Rating distribution as at 30 September, 2017 Rating distribution as at 28 February, 2018
Mature European Companies Rating Outlook Distribution (28 February, 2018)
2018 Insurance Market Briefing - France 3 April 2018 71
Rating Actions
Outlook Summary
Source: Best’s Credit Rating Monitor March 2018
2%
7%
7%84%
Developing Negative Positive Stable
94%6%
Affirm Upgrade
2018 Insurance Market Briefing -France
Hôtel Napoléon
3 April 2018