LONDON: AM Best has assigned a negative market segment outlook to the Spanish life insurance market.

Key supporting factors include AM Best’s expectation of a negative impact on earnings and solvency metrics due to the financial market volatility and global recession driven by the coronavirus (COVID-19) pandemic, a reduced demand for savings products and an increased risk of corporate bond default due to the deteriorating economic conditions.

A new Best’s Market Segment Report, titled, “Market Segment Outlook: Spain Life,” notes that these negative factors are partly moderated by strong market fundamentals going into the COVID-19 crisis, including robust profitability and strong levels of capitalisation and liquidity. In addition, assets and liabilities are generally closely matched, reducing Spanish life insurers’ sensitivity to interest rate movements.

AM Best is maintaining a stable market segment outlook on the Spanish non-life insurance market. Key supporting factors include the market’s resilient performance against a backdrop of political turbulence and slowing economic growth, strong technical profitability and solvency metrics and conservative investment portfolios that are able to withstand increased financial market volatility.

A new Best’s Market Segment Report, titled, “Market Segment Outlook: Spain Non-Life,” notes that these supporting factors are partly offset by an expectation of lower premium volumes due to pressure on gross domestic product driven by the coronavirus (COVID-19) pandemic, as well as the persistent low interest rate environment.