NU Online News Service, Oct. 23, 2:15 p.m. – Standard & Poor’s London office says that instability and uncertainty in global equity markets in 2002 has caused the financial strength of the U.K. life insurance market to fall farther than it has in more than five years.
“With nine downgrades and only one upgrade in the past 12 months, the U.K. life market has experienced its worst year in terms of credit downgrades since the current insurance cycle began,” says Standard & Poor’s credit analyst and director of life insurance ratings Paul Waterhouse in a new report. The market saw the ratings on a four other insurers withdrawn, he adds.
S&P sees continued pressure on ratings, with 65% on the top 40 U.K. life insurance groups–representing 84% of net premiums written marketwide–on negative outlook or CreditWatch negative ratings. Future ratings actions are, however, more likely to be related to business and operating capabilities than solvency or capital adequacy issues, the rating service says.
“Market concerns over the solvency position of U.K. life insurers are exaggerated for securely rated companies,” says Waterhouse. “Solvency and capital issues have had a notable impact on the market in recent months, but the key competencies for success going forward will stem from insurers’ ability to improve expense efficiencies, enhance profitability and develop less capital-intensive products.”