Insurance sector rated as stable
International ratings agencies Standard & Poor’s (S&P) and Fitch are both maintaining their stable outlook for the global reinsurance sector, but they’re doing so cautiously.
“Given the macroeconomic headwind now confronting reinsurers, a continuation of the downward trend in pricing seen thus far in 2008 would likely cause us to revise the sector outlook to negative,” S&P says in its September report.
Despite low interest rates, a declining and more volatile equity market, rising investment losses and a credit market squeeze, S&P says it remains optimistic.
“We expect positive and negative rating movements over the next 6-12 months to be fairly balanced and that the total number of rating actions will be low.”
Fitch predicts the general insurance reinsurance sector will generate an underwriting profit this year, assuming “normal” catastrophe losses.
“Non-life reinsurers have generally maintained underwriting discipline,” Fitch says in its 2008/09 report. “Given pressures such as declining investment income and capital flows out of the sector, Fitch believes this discipline is likely to be maintained over the next 12-18 months.”
Fitch says it does not anticipate a “tipping point” in the foreseeable future at which reinsurers’ operating performance and market conditions no longer support a stable rating outlook.
“Given the macroeconomic headwind now confronting reinsurers, a continuation of the downward trend in pricing seen thus far in 2008 would likely cause us to revise the sector outlook to negative,” S&P says in its September report.
Despite low interest rates, a declining and more volatile equity market, rising investment losses and a credit market squeeze, S&P says it remains optimistic.
“We expect positive and negative rating movements over the next 6-12 months to be fairly balanced and that the total number of rating actions will be low.”
Fitch predicts the general insurance reinsurance sector will generate an underwriting profit this year, assuming “normal” catastrophe losses.
“Non-life reinsurers have generally maintained underwriting discipline,” Fitch says in its 2008/09 report. “Given pressures such as declining investment income and capital flows out of the sector, Fitch believes this discipline is likely to be maintained over the next 12-18 months.”
Fitch says it does not anticipate a “tipping point” in the foreseeable future at which reinsurers’ operating performance and market conditions no longer support a stable rating outlook.