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A.M. Best Special Report: Spanish Non-Life Insurance Sector Profitable, but Challenges Lie Ahead

LONDON--(BUSINESS WIRE)-- The Spanish non-life insurance sector remained profitable in 2011, but growth remains challenging as it continues to face one of the bleakest economic environments since the 1930s, according to a new report from A.M. Best Co.

Non-life insurers continue to benefit from solid distribution networks that encourage customer loyalty and ensure that the market continues to make underwriting profits. However, Spanish insurers could face deteriorating technical results as they compete on pricing. Insurers are under pressure to offer competitive rates, as the country’s troubled economic position suppresses demand for cover and household spending remains under strain.

The report, “Spanish Non-Life Insurance Sector Profitable, but Challenges Lie Ahead”, notes the non-life insurance market faced suppressed demand for insurance, with earned premiums falling 3.4% in 2010, although in 2011 non-life earned premium stabilised and increased a modest 0.6% to EUR 31.2 billion. Growth in property and funeral expenses business helped offset decreases in motor and liability insurance. Gross and net claims improved in 2011.

However, while Spain’s non-life insurance market is profitable, the sector faces significant challenges in the event of further erosion of Spain’s sovereign creditworthiness and continued negative developments regarding the Eurozone sovereign debt crisis. Sam Dobbyn, associate director, analytics, said: “A.M. Best remains concerned regarding the prospects for Spanish government bonds and financial institutions debt, which have been impacted negatively by Spain’s economic and financial deterioration. Although A.M. Best does not expect Spanish government bonds to default, any material write-down would have a significant impact on the risk-adjusted capitalisation of the non-life sector.”

The report notes that rates across the Spanish market tend to be under pressure, reflecting the favourable loss history of the market and the competitive environment. Yvette Essen, report author and director of industry research, Europe and emerging markets, said: “There is excess capacity, with more than 100 non-life insurers in the Spanish market, while the 10 largest companies controlled 38% of the market in 2011. Competition in certain lines such as liability is aggressive; although insurers are struggling with a volatile investment environment, the non-life market remains among the most profitable in Europe.”

For a full complimentary copy of the report, please visit

Please view a video interview with Carlos Wong-Fupuy on the report at

A.M. Best Europe is holding its annual Insurance Market Briefing - Europe on 18 October in London. To register or to learn more about the briefing, please visit

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Sam Dobbyn, +(44) 20 7397 0264
Associate Director
Carlos Wong-Fupuy
Director, +(44) 20 7397 0287
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
Senior Manager, Public Relations
Yvette Essen, +(44) 20 7397 0322
Director, Industry Research
Europe& Emerging Markets

Source: A.M. Best Co.