Despite poor performance in capital markets, the underlying performance of European insurers in the second half remains strong, according to a Moody’s Investors Service report.

The ratings agency says reductions in equities valuations, rising interest rates and spread widening have taken their toll on the European insurance market, but the industry overall remains robust with no credit rating impact to date.

“However, there remains the risk that future capital market movements could place pressure on insurers’ balance sheets, for example if hedge programs are exceeded or prove to be inadequate,” Moody’s said in the report.

It also says performance is likely to vary from insurer to insurer for the rest of the year, as it has so far this year.