Global multiline insurers (GMIs) display better credit quality than other insurance groups or companies, the Standard & Poor ratings agency said today
The Global multiline insurers' robust position and improving capital translate into stable ratings report said that this type of insurers have strong competiveness and capital support, which encourages stable ratings.
Standard & Poor believes these strengths come from GMIs' wide geographic and product diversification and generally 'very strong' market positions, which support earnings.
The ratings agency said: 'Our ratings on GMIs are still stronger than the average for all insurers we rate, and only three outlooks are negative compared with four at the end of last year. The negative outlooks reflect sovereign or group level issues rather than concerns over those GMIs' insurance operations.'
Over the past 18 months the GMIs' capital positions continued to improve, and remain a rating strength. However, low interest rates continue to dampen GMIs' profitability, particularly from life insurance business.
'Our economists predict a slight increase in long-term interest rates between 2013 and 2015 in the US, UK, Germany and Japan, which might ease the pressure on earnings,' Standard & Poor continued.
'On the other hand, we see mixed trends in the growth of assets under management and new-business margins, depending on the region and product line.'
Looking at non-life insurance, the agency said it saw rate increases in selected product lines in several regions. Although, GMI's tend to be ahead in this segment, 'we cannot rule out setbacks,' it warned.
Standard & Poor currently rate eight of the nine 'global systemically important insurers' (G-SII), that the Financial Stability Board and the International Association of Insurance Supervisors published in July this year.
'The implications for G-SIIs are still unclear. But we believe that from 2019, potentially higher capitalisation requirements and stricter supervision could influence our ratings on insurance groups classified as G-SIIs,' it said.
