Europe’s general insurers still face challenges despite an improved economic environment, according to a report from AM Best.

A “period of uncertainty” is expected to continue “until European policymakers find a long-term solution to eurozone imbalances”, the ratings agency says.

“Eurozone countries will continue to face many challenges over the coming months, with many still struggling with high unemployment and stagnant economic growth.”

The first nine months of this calendar year have been relatively benign for natural catastrophes and large claims, with flood losses within most companies’ catastrophe loss budgets.

In France non-life premiums grew 2.5% in the first five months, led by a 4.5% gain in residential property, but motor insurance rates are softening, AM Best says. Germany’s total insurance market is expected to experience similar growth for residential this year.

“Competition remains a challenge to sustained profitable underwriting,” the report says. “In Germany aggregators are becoming an increasingly popular tool for personal lines insurance purchasing.”

In Spain total premiums underwritten in the first half fell 1.3% compared with the corresponding period last year.

Insurers have taken steps to improve capital positions, including reducing risk in investment portfolios, re-engineering products and refining asset liability matching strategies.

Leading insurers generally grew last calendar year, with gross written premium for the 20 largest European general insurance and life companies rising 2.2%, the report says.

Insurers are seeking to centralise reinsurance purchasing as they focused on enterprise risk management.