In a newly published article – Global Insurers Weather The Credit Turmoil–Thus Far – Standard & Poor’s credit analysts have concluded that “many of the largest insurers around the world will be generally less affected by the ongoing credit market and economic dislocations;” So far the crisis has mainly hit Wall Street investment houses, commercial banks, mortgage lenders, and U.S. mortgage intermediaries.
S&P found that “many U.S., European, and Asian companies seem well positioned to withstand the turmoil generated by the collapse of the U.S. housing market, thanks to relatively low exposure to residential mortgage-backed securities and ongoing efforts since the start of the year to bolster capital.”
S&P also noted that ,”many of the insurers that have seen negative ratings actions are closely tied to the fortunes of the U.S. housing collapse–the mortgage and title insurers–or those like AIG, which was hurt by its large position in the credit default swap market. In addition, some insurers have come under ratings pressure because they are in the low point of their pricing cycle more so than because of the securities they carry as assets.”
Nevertheless, S&P said it “believes that the risks to the insurance industry aren’t over yet. In the third quarter of 2008, many industry players will show some degree of asset-related losses on their books, and many, if the market uncertainty persists, will find that undertaking dynamic hedging strategies is more expensive.
“Although insurers are sometimes painted with the same broad brush of fear that has covered banks and other financial institutions, Standard & Poor’s believes that most of the industry is in better shape than many of the financial institutions now being punished by the market.”
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor’s credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor’s public Web site at www.standardandpoors.com.
Source: Standard & Poor’s
Was this article valuable?
Here are more articles you may enjoy.
USAA to Lay Off 220 Employees 
Former MLB Player, 3 Others Charged with Staging Auto Accident in Miami 
Trump’s Bond Insurer Tells Judge Shortfall Is ‘Inconceivable’ 
Grand Jury Indicts ‘Hole in Won’ Owner on Prize Insurance Fraud Charges 
