S&P: Capital Remains ‘Key Rating Consideration’ for Multiline Insurers

March 1, 2011

Standard & Poor’s Ratings Services said that in its opinion “global multiline insurers’ (GMIs) capital positions have recovered significantly since 2008.”

In an article entitled “Capitalization Remains A Key Component Of Global Multiline Insurers’ Creditworthiness Amid Uncertain Market Conditions,” S&P also noted that “despite these improvements, it expects capitalization to remain a key rating consideration and 2011 to remain a challenging year for insurers.”

“We see a risk that asset markets could remain volatile because of continued concerns over sovereign debt, a factor that could weigh on GMIs’ capital bases,” stated credit analyst Karin Clemens. “We also anticipate that lower returns in invested assets will hamper insurers’ results in 2011. In addition, we believe that upcoming adjustments to insurance supervision, such as Solvency II in the EU, will ultimately result in the promotion of stronger capital levels.”

According to the article, in view of this potentially profound transformation, S&P expects the market’s attention to remain on companies’ capital positions and their ability to effectively manage the risks arising from what could be adverse changes in financial market conditions.

The article also outlines S&P’s view of the disparities among the GMIs’ capital positions, the hurdles insurers face because of continually low interest rates, and its assessment of the adequacy of rated GMIs capital.

The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor’s public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Alternatively, call one of the following Standard & Poor’s numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4011.

Source: Standard & Poor’s

Was this article valuable?

Here are more articles you may enjoy.