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Italian Life Margins Still Strong

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NU Online News Service, March 17, 2004, 12:13 p.m. EST – The Italian life insurance market looks good.[@@]

Analysts in the London office of Moody’s Investor Services give that assessment in a new review of the Italian life market.

Banks now produce about 70% of life sales in Italy, and banks tend to generate business with lower profit margins than the insurers’ own distribution networks generate, the analysts write. But margins are still higher in Italy than they are elsewhere in Europe, and Italian life insurers face fewer worries about weak stock prices because they put less of their investment portfolios in stock, the analysts add.

Italian life insurers have room to grow, because Italians spend only about 4.4% of gross domestic product on life premiums. That compares with an average of 4.8% for all of Europe.

The analysts add that Italian life insurers could benefit from a proposal that would let employees invest their employers’ annual severance funding provisions in private pension funds.