Stronger management in the UK life insurance sector has led credit rating agency Fitch to predict a stable outlook after companies turned in a strong set of results for the first half of 2013.
Fitch said that despite the sluggish economy it was 'upbeat' about the sector, stating that the majority of UK life insurer credit ratings were likely to be affirmed over the next 12-24 months.
Senior director David Prowse said: 'Underlying profits and cash generation are continuing to improve.
'This is no accident and it is not simply a side-effect of recovering financial markets.
'It is the direct result of stronger management discipline in three vital areas where some insurers had previously lost focus cost control, product mix and pricing.'
Chief executives have continued to emphasise cash generation as their priority, though several of them also highlighted growth opportunities in emerging markets.
Fitch said growth could have a positive impact on ratings in the long term if it increases and diversifies earnings, but in the short term could adversely affect ratings if too much strain was placed on capital and cash.
It said the annuity market was shifting rapidly towards medically underwritten annuities as customers become aware that they can shop around for a larger annuity based on their lifestyle or certain medical conditions. Aviva and Legal & General were among companies now competing strongly with specialist providers in this sector, Fitch said.