Best’s Market Segment Report: AM Best Assigns Stable Outlook to Italian Life Market

AMSTERDAM–(BUSINESS WIRE)–AM Best has assigned a stable outlook to the Italian life
insurance market. Key supporting factors include the active management
of business mix, with a shift of production from traditional savings
products to unit-linked and hybrid products. Profitability has been
helped by average guarantees on in-force business that are low and
expected to remain below investment returns. Furthermore, insurers
demonstrate solid solvency, although balance sheets are sensitive to
potential increases in interest spreads due to significant exposure to
local sovereign bonds.

A new Best’s Market Segment Report, titled “Market Segment
Outlook: Italy Life”, states the Italian life insurance market has
reported healthy profits over recent years, and AM Best expects good
market discipline to support prospective technical margins.

The report adds that holdings in Italian government debt expose the
market to local economic and political instabilities, and a sharp
increase in Italian government yields could weaken balance sheets due to
the devaluation of assets. Italian life insurers are heavily exposed to
the Italian banking sector, as the main distributor of their products
and through investments in the debt instruments of financial
institutions. The banking sector’s exposure to non-performing loans
sharply decreased in 2017 and 2018, but remains at an elevated level.

Despite a challenging operating environment, the Italian life insurance
segment is expected to maintain solid technical profitability and
balance sheet strength owing to its proven ability to adapt its business
mix and reduce average guarantees in portfolios through active
management. However, further weakening in the operating environment,
particularly a sustained recession or a widening in government spreads,
could impact technical results and the solvency levels of the segment,
and cause AM Best to revise its outlook to negative.

To access the full copy of this market segment report, please visit

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
for more information

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its


Michael Dunckley, CFA
Associate Director, Analytics
20 308 5422

Jose Berenguer
Associate Financial Analyst
20 308 5429

Yvette Essen
Director, Research, Communications
Media –
Europe, Middle East & Africa
+44 20 7397

Edem Kuenyehia
Director, Market Development &
20 7397 0280

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