A major credit rating agency forecasts a negative outlook for U.S. life insurers.
Moody’s Investors Service labels the credit outlook for U.S. life insurers as “credit negative” in the Nov. 1 edition of “Credit Outlook,” a weekly publication covering credit implications of current events.
Underpinning the adverse rating, Moody’s states in the report, is an increase in the National Association of Insurance Commissioners’ capital requirements for U.S. life insurers. The change in capital requirements are driven by year-end NAIC assumptions respecting residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS).
Offsetting the benefits of the new capital requirements, the Moody’s report adds, are disincentives for insurers to invest in two of the better-yielding asset classes in a low-yield environment.