...Sovereign Rating Main Driver The ratings of Italian insurers are heavily linked to the rating of Italy due to their large holdings of Italian government debt. This is explained by the need to match Italian life liabilities with Italian bonds yielding more than the average guaranteed return and to minimise the risk of lapses. Life Sales Volatile Life sales remain volatile. Life products are predominantly distributed through the bancassurance channel in the form of lump-sum single premiums, and banks can compete to attract customers' savings by offering short-term high-yielding returns on cash deposits. In addition, domestic treasury bonds have historically been households' preferred form of investment, making savings products wrapped as insurance policies less attractive in terms of returns and liquidity. Fitch believes that life premiums are likely to continue to grow in 2014, albeit at a slower pace than in 2013. Non-life Profitability Weakening Fitch expects motor rates to soften in 2014,...
