S&P warns of recession risk for UK insurers
Deteriorating economic prospects and a risk of recession in the UK are a concern for the country’s non-life insurers, according to a Standard & Poor’s (S&P) report.
It says British insurers continue to achieve strong results, but the UK economy is the most exposed in Europe to the risk of recession.
The rating agency attributes this to the UK’s exposure to the US market as well as a high level of domestic debt.
“In its inflation report on February 13 2008, the Bank of England released its gloomiest forecast in a decade, acknowledging that UK growth was likely to shudder to a halt in the next few months, with a high risk that it would contract,” the report said.
S&P says this is a big issue for the long-term prospects of insurers. “Pricing is still competitive, although less so than a year ago. Underwriting margins remain broadly under pressure, therefore, and it remains to be seen how well insurers cope with softening market conditions.”
It says British insurers continue to achieve strong results, but the UK economy is the most exposed in Europe to the risk of recession.
The rating agency attributes this to the UK’s exposure to the US market as well as a high level of domestic debt.
“In its inflation report on February 13 2008, the Bank of England released its gloomiest forecast in a decade, acknowledging that UK growth was likely to shudder to a halt in the next few months, with a high risk that it would contract,” the report said.
S&P says this is a big issue for the long-term prospects of insurers. “Pricing is still competitive, although less so than a year ago. Underwriting margins remain broadly under pressure, therefore, and it remains to be seen how well insurers cope with softening market conditions.”