The U.S. life sector is just entering its most difficult phase of the current recession, says rating agency Standard & Poor’s in a new report.
As a result, life insurers’ investments in bonds, commercial mortgages and commercial mortgage-backed securities could see exceptional stress in the next 12 to 18 months, says S&P, New York. As a result, the agency is keeping to its previously announced negative outlook for the sector.
The U.S. health insurance sector has also been vulnerable to the economic slowdown, and many health insurers are likely to face even more problems in the months ahead due to a stagnating and shrinking private sector and declining growth opportunities from the public sector, the agency said.
“We believe that some health insurers will be challenged to sustain their credit profiles in the coming year, while others can be expected to operate through this cyclical downturn incurring some credit profile strain that is unaccompanied by a rating change,” S&P stated.