German P/C ratings are stable, says Fitch

FRANKFURT, Germany--Rating agency Fitch Ratings Ltd. has maintained its stable outlook on the German property/casualty sector, predicting that the number of rating upgrades and downgrades will balance over the next 12 months.

Prices in industrial insurance are broadly declining this year, although scarce capacity in some special lines is threatening to increase rates, Fitch said in a statement. And the recent merger of key industrial players Cologne-based Gerling-Konzern Versicherungs-Beteiligungs Aktiengesellschaft and Talanx AG. is expected to further add capacity pressure, with foreign insurers unlikely to make up the difference in the short term, Fitch added.

Commenting on the industrial market, Tim Ockenga, associate director in Fitch's insurance team said: "The market for industrial insurance has fundamentally changed, with shorter-term relationships replacing former long-term arrangements. As a consequence, market participants are more focused on short-term profitability."

In a statement, Fitch said that it expects the industrial insurance cycle to become less volatile and the soft market phase to be shorter than its historical predecessors.