FITCH: Austrian insurers' prospects are closely linked to the Central Eastern and Southern Eastern European markets

15 September 2011 — Daniela GHETU
fitchProspects for Austrian insurers are closely linked to Central Eastern and Southern Eastern Europe (CESEE), as more than one-third of their premium income originates there, sais a recent report released by FITCH Ratings. Austrian insurers' extending engagement in M&A activity across the region, as the local markets offer great growth opportunities, is an additional argument in this respect.

With CESEE growth rates expected to exceed growth in Austria, FITCH estimates that the region will become even more important to Austrian insurers. However, although CESEE insurance business is generally profitable, it adds volatility to the balance sheets and earnings of Austrian insurers because CESEE countries show a relatively high sensitivity to global economic downturns. On the other hand, according to FITCH findings, one of the most notable investment risks for Austrian insurers include exposure to CESEE government bonds and banks.l

Austrian insurers have strong capital, which protects their solvency positions from fluctuations in financial markets. Fitch views Austrian insurers as well prepared for Solvency II, the new regulatory regime for European insurers due to take effect in 2013. Insurers representing 99.9% of the Austrian market (by premium) took part in the fifth Quantitative Impact Study for Solvency II (QIS5). In aggregate, they reported a solvency ratio of 246%, well above the European average of 165%.

The report, entitled 'Austrian Insurance Market Review and Prospects', is available at the Fitch Ratings website.

Source : Fitch Ratings

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