This report does not constitute a rating action. We expect overall profitability to continue to benefit from the sector?s good level of insurance penetration (2.6%), market diversification, and profitable business lines. We therefore expect the Portuguese P/C market will report an average net combined ratio of 85%-86% over 2025-2027, slightly better than the historical average. The anticipated improvement is largely due to better underwriting discipline, repricing efforts, and cost mitigation initiatives. It also reflects a structural improvement in the performance of the health insurance sector, which represents just over 20% of Portuguese non-life insurance and posted a net combined ratio of 82% in 2024. In addition, the estimated 12% return on shareholders' equity (ROE) in the Portuguese P/C market in
