Fitch stays ‘neutral’ on overall global insurance, US personal outlook revised down

By Michael Loney

June 6 - (The Insurer) - Fitch Ratings has maintained its “neutral” overall global insurance sector outlook as at mid-2025, but revised downwards four of its sector outlooks including U.S. personal insurance moving to "neutral."

The neutral global insurance outlook reflects broadly supportive operating conditions despite weaker growth prospects and market volatility.

The outlooks for the U.S. health and U.S. non-life personal sectors were revised downwards to “deteriorating” and “neutral,” respectively, while the sector outlooks for China and Taiwan were also revised to “deteriorating.”

The U.S. non-life personal line sector outlook revision to “neutral” from “improving” was made because Fitch views further improvement in underwriting performance as unlikely because of California wildfire losses, increased competition in auto that has slowed rate growth, and the potential impact of tariffs on loss cost severity.

Taiwan’s life sector outlook was revised to “deteriorating” in response to heightened risks to insurers’ earnings and capital following a recent sharp appreciation of the local currency, which has exposed insurers to significant potential losses.

Fitch also revised the China life sector outlook to “deteriorating” to reflect slower growth prospects due to product and distribution changes and potential increase in earnings volatility due to rising exposure to domestic equities in adherence to the Chinese regulator’s new initiatives.

The rating agency said that its unchanged “improving” outlook for the German non-life and Italian life sectors reflect continued strong pricing momentum and improving net flows, respectively.

Fitch said that issues to watch include higher-than-anticipated fixed-income market volatility and default rates that could hamper insurers’ financial profiles through valuation losses.

It is also concerned about the ability of premium rates to keep pace with claims inflation to preserve non-life margins as the pricing cycle turns in some markets.

In addition, Fitch highlighted that profits and capital remain sensitive to lower yields and interest rates, but it expects the adverse effect will be gradual.

Lastly, it cited revenue and earnings exposure to a weaker U.S. dollar.