S&P: Low Interest Rates, Regulation Issues Are Key Insurance Industry Risks

January 23, 2013

Standard & Poor’s Ratings Services has issued a new report – “Global Insurance Key Risks And Credit Trends Dominated By Low Interest Rates And Regulation Issues -” which examines how those two issues are “dominating the agendas of the leading insurers’ CEOs around the world.”

S&P notes that the “interest rate environment is adversely affecting insurers’ credit quality and challenging their business models. Regulatory changes are creating great uncertainty, but may ultimately be either positive or negative for insurers.”

In addition the report points out that the “insurance sector is facing an accumulation of risks, owing to adverse global economic conditions, historically low interest rates related to the weak economic trends, and heightened sovereign-related risks.”

S&P added that it believes “these risks are likely to place downward pressure on insurance ratings globally, as the current negative bias in our rating outlooks for the sector indicates. Regulatory uncertainty adds the potential for rating volatility in the future.”

Source: Standard & Poor’s

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