Agency takes aim at Dutch insurance sector
Fitch Ratings, the ratings division of the Fitch Group, has released a statement concerning the state of the Dutch insurance sector. The Dutch insurance sector has been experiencing some turbulence in recent months due to economic troubles in the Netherlands and Europe at large. These problems have caused some concern amongst insurance companies and investors who have dumped money into the sector. The statement from Fitch Ratings aims to provide some insight on the matter and placate these concerns.
Sector forecast to remain stable for the time being
According to the statement, Fitch expects the ratings outlook for the Dutch insurance sector to remain stable, with most insurance companies likely to received affirmation over the next year or two. The agency’s outlook on the sector assumes weak economic recovery and mild growth in gross domestic product. The Dutch economy has already shown promising signs of recovery, thus exceeding the expectations provided by Fitch. The agency’s outlook does not factor in any extraneous economic shocks, however, which may serve to destabilize the Dutch insurance sector to some degree.
New regulations cause problems for insurers
Fitch notes that the life insurance sector in the Netherlands has been on the decline since 2007 due to a variety of policy changes in the region. These policy changes were designed to help boost competition amongst banks, but had an inadvertent affect on the life insurance sector as well. New policies introduced lowered interest rates, which quickly translated into reduced profits that hurt the investments coming into the insurance sector. New regulations imposed by the European Union had a pronounced affect on the non-life sector, leading to lost profits and making it more difficult for some insurers to do business.
Dutch insurance sector likely to thrive despite troubles it sees
Despite the problems the Dutch insurance sector faces, Fitch Ratings expects that the sector will be stable for the foreseeable future. Apart from dramatic events that may be impossible to predict, Dutch insurers are likely to maintain their positive ratings over the next two years. Fitch notes that insurance companies have been showing remarkable ability to adapt to the challenges that they are facing in the sector.