Swiss market remains resilient despite multiple challenges

The Swiss insurance market remains resilient, despite the challenge of consistently low interest rates and shrinking margins in the Swiss life insurance market, according to Fitch Ratings.

The rating agency also identified the challenges of the gap between return on investments and guarantees on life products shrinking, high insurance penetration rates and an extremely competitive environment in the Swiss insurance market, meaning top-line growth opportunities are limited.

However, Fitch said it views positively that a large proportion of Swiss insurers' life liabilities are related to collective occupational pension insurance, where the guarantees are only granted on a year-to-year basis. Also, despite the competitive environment in the Swiss P/C market, insurers have been selective in underwriting and disciplined in pricing with combined ratios remaining at strong levels in line with previous years (market average, 91 percent in 2015).

“We believe overall the Swiss insurance sector remains adequately capitalised, despite the negative impact of low interest rates on life insurers,” Fitch said.

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