Ratings agency Moody's has reported a stable outlook for the German non-life insurance market.
It said the outlook reflects the market's improved underwriting performance, historically cautious reserving practices and relatively low levels of financial debt.
Moody's said growth in the German market, Europe's second largest in terms of permium volume, is limited due to its mature and highly fragmented nature.
But with 15 insurers accounting for 60% of the overall premium income, it believes the market is ripe for consolidation.
In recent years, earnings in the German general insurance market have been depressed by the investment markets and large underwriting losses, Moody's said.
"Companies are focusing on restoring core underwriting discipline which is beginning to yield positive results, and the German Insurance Association expects that underwriting profitability will be restored in 2003 after four years of losses," said Moody's associate analyst Beatrice Braun.
It said another key factor supporting the stable rating is the well established distribution channel of tied agents that presents a significant barrier to new entrants.
