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Global Home > Insurance

Rating Outlook for U.S. Health Insurance Industry Revised to Negative

Fitch Ratings has revised the Rating Outlook for the U.S. health insurance industry to Negative from Stable due to expectations for an adverse effect on industry fundamentals related to COVID-19. Fitch expects a weakening of profitability and debt service metrics driven primarily by heightened claims costs associated with COVID-19 testing and treatments, including hospitalizations.

Global Reinsurance Sector Outlook Negative On Coronavirus Concerns

Fitch Ratings has revised its outlook for the underlying fundamentals (sector outlook) of the global reinsurance sector to negative from stable. The sector outlook revision is due to increased concerns over COVID-19, the disease caused by the coronavirus, and related impacts on the credit quality of reinsurers.

Fitch Ratings' Outlook on Fundamentals of U.S. P/C Insurance Sector Revised to Negative

Fitch Ratings has revised its outlook for the underlying fundamentals of the U.S. property/casualty (P/C) insurance sector to negative from stable (sector outlook). The sector outlook revision is due to increased concerns over COVID-19, the disease caused by the coronavirus, and related impacts on near term performance and the credit quality of insurers.
 

Rating Outlook for U.S. Life Insurance Industry Revised to Negative

Fitch Ratings has revised the rating outlook for the U.S. life insurance industry to negative from stable. The outlook revision is due to increased concerns over the Coronavirus and related impacts on the credit quality of life insurers. Today's rating outlook revision to negative reflects significantly increased uncertainties facing life insurers associated with the material disruption in the financial markets, which may last for an extended period of time.

Fitch Rtgs Revises UK Life Insurance Sector Outlook to Negative

Fitch Ratings has revised the UK life Insurance sector outlook to Negative from Stable in light of the rapidly evolving coronavirus outbreak. The change in the outlook is based on the significant uncertainty created by the global coronavirus pandemic, which has resulted in high levels of volatility in capital markets.

Dutch Insurance Outlook Revised to Negative on Coronavirus

Fitch Ratings has revised the Outlook on the Dutch insurance sector to Negative from Stable on increased financial markets volatility and heightened economic recession risk resulting from the coronavirus pandemic. 

Coronavirus Market Disruptions to Add Pressure on Korean Insurers

Korean insurers' financial performance and business growth are likely to be constrained by the coronavirus outbreak in the near term.We expect that the recent rapid spread of coronavirus in Korea could raise Korean insurers' investment asset risks due to the higher financial-market volatility as well as expected interest-rate cuts by many central banks, including Korea's, to minimise the impact of the epidemic on the global economy.

 

More on coronavirus

Assessing Global Financial Institutions' Vulnerability to Coronavirus Events

Fitch Ratings is actively assessing its global portfolio of bank, non-bank financial institution (NBFI), insurance company and fund ratings in light of the rapidly evolving coronavirus outbreak. As part of our portfolio assessment process, we are ranking institutions, sectors and regions from most to least vulnerable to the impact of the outbreak.

European Life Insurers Continue Shift to Capital-Light Products

European life insurers are gradually shifting away from traditional guarantees towards more capital-light products, transferring part of the investment risk to policyholders, says Fitch Ratings in a new report. This is the result of the protracted low interest rate environment, posing major challenges to insurance companies operating in the euro area

Newsletter

Insurance Insights

Keep up to date with all the latest commentary, analysis and research from across the Insurance sector with our monthly global newsletter. This month’s edition discusses how storms Ciara and Dennis add to pressure on UK Insurers, the current disruption in the U.S. capital markets caused by the coronavirus and much more.

U.S. Health Insurer Medical Loss Ratios will be Elevated in 2020 Following Strong 2019

Although there is currently a high level of uncertainty around many aspects of coronavirus disease 2019 (COVID-19), Fitch Ratings expects the U.S. health insurance sector to report moderately elevated medical loss ratios in 2020 as a result of associated medical claims, according to a new dashboard report.

Coronavirus Market Disruptions Increase Risks to US Life Insurers

The current disruption in the U.S. capital markets caused by the coronavirus (COVID-19) outbreak is increasing the risk profile of all U.S. life insurers.

Korean Insurers' Overseas Investment to Grow; Hedging Burdens

Overseas investment by Korean insurers is likely to continue to rise in the search for higher investment returns and longer asset duration to match the asset-liability gap, although hedging costs could remain a burden.

Indonesia's Takaful Sector Backed by Economic Developments

Premium growth in Indonesia's sharia insurance business will be sustained by the country's economic development, with government support as a key driver.

newsletter

ESG Monthly

Our new ESG monthly newsletter includes our global ESG perspectives across all rated sectors and countries, with commentary covering our views on ESG credit risk and the broader macro trends in ESG and the debt capital markets. 

Subscribe Now

India's IPO Plan Will Benefit Insurance Industry

The Indian government's proposed IPO of state-owned Life Insurance Corporation of India (LIC) will improve the accountability and transparency of the country's largest insurer and benefit the insurance industry. Fitch believes that the benefits may trickle down to the entire domestic insurance industry in terms of attracting more foreign interest, which could result in an increase in foreign capital inflows into the industry.

Regulatory Developments to Drive Takaful Growth in Malaysia

The creation of an Islamic finance-enabling ecosystem is the key driver of the Malaysian takaful industry's growth, Fitch Ratings says. This makes Malaysia a leading model for the sector, especially in light of the Muslim-dominated make-up of the untapped population segment.

Webinar

Solvency II, four years on

Fitch Ratings held a webinar on the Solvency II (S2) review that is currently under way. Willem Loots and Federico Faccio, Senior Directors in the EMEA Insurance team, also outlined how Fitch currently applies S2 in insurance ratings, and briefly discuss some S2 related learnings from Fitch’s recent European Insurance Roadshow.

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Investment Grade Catastrophe Bond Unique for ILS Market

Achieving an investment-grade rating for a pure natural catastrophe bond is a rare occurrence; it has been over 10 years for property-catastrophe exposed deals. Last week, Fitch Ratings assigned a 'BBBsf' rating to notes issued through Stratosphere Re 2020-1. Like other catastrophe bonds, Stratosphere offers an alternative risk transfer mechanism to reinsure primary property risks against remote loss events.

Webinar on Demand

2020 Outlook: Latin American Insurance

Fitch’s Latin America Insurance Ratings team discussed the outlook for the insurance sector across the region on January 28. Senior analysts addressed key themes and reviewed the most important risks facing the region’s insurance sector. Discussion was followed by a Q&A session.  Listen Now

Webinar

Fitch Ratings Outlook 2020: Insurance

Please listen to our analysts discuss the 2020 outlook for US P&C Insurance, US Health Insurance, and US Life Insurance.  Listen Now

Thai Life Insurers Face Challenges from Lower Returns

Thai life insurers' capitalisation may face greater strain from investments in riskier assets as they have increased their holdings of higher yielding assets to counter a prolonged period of subdued investment returns. However, we expect their capital-adequacy ratio to stay steady after the adoption of a new capital regime later in 2020, supported by a reasonably strong capital position with a relatively large low-risk investment portfolio and timely adjustment of business strategy.

S2 Review to Dominate Regulatory Agenda for European Insurers

The European Commission's (EC) 2020 review of Solvency II (the S2 review) is likely to be the dominant regulatory theme in European insurance over the next few years, Fitch Ratings says. However, the review is likely to focus on the evolution of many technical aspects of the regime, leaving the overall fundamentals unchanged.
 

Japan Life Insurers' Unhedged Foreign-Currency Exposures Raise Risks

Japanese life insurers' pursuit of better yields have led them to expand their foreign-currency denominated assets and increase their unhedged foreign-currency exposures, which will make their investment portfolios more risky.

Fitch Expects to Rate Stratosphere Re Limited Catastrophe Notes 'BBBsf(EXP)'; Outlook Stable

Fitch Ratings expects to rate the Series 2020-1 Principal At-Risk Variable Rate Notes issued by Stratosphere Re Ltd., a registered special purpose insurer in Bermuda, as ‘BBBsf(EXP)’ with a Stable Outlook. The notes expose investors to multi-year, natural catastrophe 'tail' losses to personal residential, commercial residential and commercial business policies. This is a rare cat bond issue that will receive an investment grade rating and is rated only by Fitch Ratings.

Australian Bushfire Insured Losses Eased by Reinsurance, But May Rise

Reinsurance protection and increased natural hazard allowances should help major non-life insurers contain their earnings volatility stemming from the devastating bushfires in Australia.

webinar on demand

Asia-Pacific Insurance 2020 Outlook (Japan, China and South Korea)

Fitch Ratings’ Asia-Pacific Insurance Rating Team gathered to discuss the 2020 outlook Life and Non-Life sectors of Japan, China and South Korea.

 

Listen now

Foreign Insurers to Step Up Expansion in China Life Market

The removal of a cap on foreign ownership in Chinese life insurers will spur international insurers to expand in the segment. The China Banking and Insurance Regulatory Commission will allow foreign investors to raise their stakes in life insurance companies to 100% from 1 January 2020, from the current 51%.

U.S. Personal Auto Insurance Underwriting Performance Has Likely Peaked

Performance in the U.S. personal auto insurance market continues to run favorably in 2019, on par with underwriting profits achieved in 2018, according to Fitch Ratings. However segment results for the industry are likely unsustainable going forward based on shifting market fundamentals.

Fitch Ratings Wins 2 Structured Finance Awards;Named Best in Financial Institutions & Public Finance

Fitch Ratings has been recognised as the best rating agency for structured finance at FinanceAsia's annual 2019 achievement awards and was also voted Australian structured finance rating agency of the year by KangaNews. FinanceAsia also named Fitch as the best credit ratings agency for financial institutions and public finance.

Silent Cyber Assessment Key to Managing Evolving Insurance Risk

Property and Casualty insurers are gradually gaining sophistication in measuring risk aggregations and modeling potential losses from catastrophic cyber events, but efficacy of this analysis is inhibited by exposure to non-affirmative or "silent" cyber risk. Many insurers now view cyber insurance as an attractive source of premium growth and profits. 

Outlooks 2020

U.S. P/C Insurers' Capital Strength, Pricing Improvement Support Stable Outlook

U.S. property/casualty (P/C) insurers are poised to generate slightly improved underwriting profits in 2019 and could do so again in 2020, according to Fitch Ratings' outlook for the sector. Fitch maintains a Stable Outlook for the sector's fundamentals and its ratings in 2020.

Outlooks 2020

Market Conditions Promote Continued Favorable Margins for US Insurance Brokers' in 2020

Strong revenue growth for publicly traded U.S. insurance brokers is expected for 2020 given near peak level organic growth and favorable U.S. commercial lines insurance pricing trends. Further, margins remain consistent with investment-grade ratings and are expected to be stable-to-modestly improving in 2020, according to Fitch Ratings' 2020 U.S. Insurance Broker Outlook report.

Sri Lankan Insurers' Regulatory Capital Positions Drop on IFRS 16 Adoption

Sri Lankan insurers' risk-based capitalisation (RBC) ratios have fallen with the adoption of new accounting standards for lease contracts; SLFRS 16, the local equivalent of IFRS 16

Outlooks 2020

Dutch Insurance: 2020 Outlook

Fitch Ratings has maintained a Stable Outlook on the Dutch insurance market for 2020, despite a decline in government bond yields in 2019. We believe Dutch life insurers have made significant progress in adapting to the low-rate environment by revising strategies and product offerings.

 

To hear more from Fitch on the Dutch Insurance market, please join us at our Amsterdam Credit Outlook Conference on 4th February.

Webinar on Demand

French and German Life Insurance – Compare and Contrast

Please listen to Fitch Ratings for a conversation on the Life Insurance sector in France and Germany with Stephan Kalb and Manuel Arrive, senior analysts in the EMEA Insurance team, who compare and contrast the two markets in a ‘lower-for-longer’ rate scenario. Listen Now


Related:

outlooks 2020

German Non-Life Insurance: 2020 Outlook

German Motor Rates Decline, Catastrophe Losses Increase

German non-life insurers are likely to continue increasing their premium income in 2020 to maintain profitability in the face of dwindling investment returns, Fitch Ratings says. Our sector outlook remains stable, reflecting our expectation that insurers will achieve premium growth sufficient to maintain good profitability.

outlooks 2020

French Insurance: 2020 Outlook

Fitch Ratings has revised its sector outlook on the French life insurance market to negative from stable. The outlook change reflects increasing pressure on the sustainability of the business model, and on capitalisation and earnings, due to prolonged low-to-negative interest rates.

 

outlooks 2020

Japanese Insurers Investment Risks Likely to Rise in 2020

The biggest risks for Japanese insurers will continue to stem from financial markets in 2020, says Fitch Ratings. Fitch expects insurers to boost their investments in foreign credit-spread products in search of yield amid the 'super-low' interest rates in Japan.

 

Related Report: 2020 Outlook: Japan Life and Non-Life Insurance

View all Outlooks: Credit Outlooks 2020

outlooks 2020

Chinese Insurers Adjusting for Stable Earnings and Capital

Fitch Ratings maintains a stable outlook on the Chinese insurance sector, reflecting an ongoing shift in the business mix to seek a stable stream of premium and enhance margins. Capitalisation remains adequate to support asset risks in view of more efficient asset-liability management (ALM) amid challenging financial markets.

 

Related Report: 2020 Outlook: China Insurance

View all Outlooks: Credit Outlooks 2020

Outlooks 2020

UK Non-Life Company Market Has Negative Sector Outlook for 2020

The sector outlook for the UK non-life insurance company market in 2020 is negative, reflecting high claims inflation and a weak pricing environment for home and motor insurance, Fitch Ratings says.

To hear more from Fitch on the UK Insurance market, please join us at our Insurance Roadshow in London on 30th January.

 

Outlooks 2020

UK Life Insurance

Fitch Ratings’ sector outlook for the UK life insurance market remains stable. This is because we believe that strong structural demand for savings products and pension de-risking solutions will not be significantly affected by near-term economic challenges and political uncertainty.

 

To hear more from Fitch on the UK Insurance market, please join us at our Insurance Roadshow in London on 30th January.

 

Outlooks 2020

Italian Insurance

Fitch Ratings’ sector outlook for the Italian life insurance market remains negative, reflecting our view that the high sensitivity to credit spreads on Italian government debt and very low interest rates will have a negative impact on insurers’ capitalisation in 2020. The non-life sector outlook is stable as we expect growth in non-motor business to continue in 2020, while underwriting profitability in motor lines should remain relatively weak.

 

Outlooks 2020

German Life Insurance

Fitch Ratings has revised the sector outlook for the German life insurance industry to negative from stable. The revision reflects the negative impact from further declined market interest rates on reinvestment yields and the knock-on effects on investment margin and capital.

 

To hear more from Fitch on the German Insurance market, please join us at our Insurance Roadshow in Frankfurt on 6th February.

 

Outlooks 2020

Korean Insurers' Profitability to be Under Pressure in 2020

Fitch Ratings maintains a stable outlook for the Korean insurance sector, with strengthening of capital adequacy following the tightening in the regulatory capital regime to be offset by downward pressure on insurers' financial performance.

 

Related Report2020 Outlook: Korea Insurance

View all outlook: Credit Outlooks 2020

Fire Premium Hike Positive for Japanese Non-Life; Limited Earnings Impact

Fitch Ratings views premium increases for fire business recently approved by Japan's Financial Services Agency as positive for the earnings of non-life insurers. However, this will be offset in part by rising reinsurance costs due to a likely rise in reinsurance premiums and coverage. A short-term boost may also be somewhat limited as most retail fire policies have multi-year terms with a maximum of 10 years.

Webinar

Chilean Unrest: Challenges Ahead

On Demand

 

Join us for a webinar with the Latin America Ratings Group to discuss Chile’s ratings and the risks the protests pose to economic growth, the fiscal deficit and debt trajectory, and President Piñera’s reform agenda as well as the corporate, bank and insurance sectors in the country.

Register Now

 

Related: Chilean Unrest Has Mixed Effect on Corporate, Sovereign Credit

Webinar

Fitch on Life Insurance Consolidators

Listen to Fitch Ratings on demand for a conversation on the European Life Insurance consolidation industry with Willem Loots, Senior Director in the EMEA Insurance team. During this brief presentation, Willem provided an update on:

  • Key industry drivers and their progress in 2019
  • Key rating considerations for Fitch’s relevant portfolio
  • Prospects of the sector intro 2020 and the medium term

Listen Now

Typhoon Hagibis an Earnings Event for Japan's Insurers

Typhoon Hagibis is likely to be an earnings event for Japan's three main non-life insurance groups, MS&AD, Sompo and Tokio Marine, with no material effects on capital and no rating implications. We expect the companies' net losses after reinsurance and catastrophe reserve releases to be limited in relation to their overall earnings.

Excess & Surplus Lines Premium Growth Accelerates in Response to Weaker Results

Direct written premiums in the U.S. excess and surplus (E&S) lines market for 2018 grew at the greatest rate since 2012, increasing 11%, according to Fitch Ratings. The trend continued to strengthen in the first-half of 2019 with premium growth of 15%, a rate nearly double the overall property/casualty market's growth rate.

D&O Liability Market Pricing Increases as Tort Environment Shifts

Underwriting conditions in the U.S. commercial lines insurance market have improved significantly in many segments in 2019, including directors and officers (D&O) liability. Several years of weaker performance driven by flat premium growth and less favorable claims trends in a shifting tort environment, has spurred movement by carriers to restore profitability in this challenging line.

Japanese Non-Life Insurers' Financial Strength Likely Unaffected by Typhoon Faxai Losses

Nikkei news reported that the gross insured loss of Japan's top four non-life insurers could reach several hundred billion yen, although the insured loss is likely to be smaller than that caused by Typhoon Jebi in 2018.

Global Reinsurance Guide 2020

Our 10th edition of the Global Reinsurance Guide 2020, providing reinsurance brokers, security committees and reinsurance investors with the agency’s latest research and views on the global reinsurance sector is available. 

Download Now

Medical Liability Monitor

MPL Insurance Market Slowly Reacting to Poorer Profits (PDF)

In the article Fitch analysts discuss that the U.S. medical professional liability insurance market has posted underwriting losses for the last three consecutive years, and is now gradually responding with premium rate increases.  Fitch has questions whether the industry will take sufficient pricing and underwriting actions to restore profits, given competitive pressures and potential for less favorable claims trends. Download Now

Hong Kong-Listed Chinese Life Insurers' 1H19 Profit Rises; Solvency Resilient

The operating profit of the six companies, which have their own listings or are part of a listed group, improved significantly in 1H19 from a year earlier, largely driven by the recovery of the A-share market in China.

Taiwan Life Insurers to Accelerate Capital Top-Ups, Product Shifts

These changes are likely to have a positive impact on the credit profile of the industry in terms of lower asset leverage (or higher net worth ratio), stronger capitalisation and more robust business profiles.

Introducing our ESG Heat Map

Fitch Ratings has launched an ESG Heat Map covering 29 different sub-sectors for Financial Institutions to provide further insight into the relevance of ESG factors to credit ratings. The map is designed to help users understand how relevant individual ESG topics are to credit ratings across different sectors.

North American P/C Insurers See Steady Results at Mid-Year 2019

Higher investment income and modestly weaker calendar-year underwriting margins kept operating performance for North American property/casualty (P/C) insurers steady during 1H19, according to a new report by Fitch Ratings. Compiling GAAP midyear results for a group of 47 companies reveals a six months aggregate combined ratio of 94.7% relatively unchanged from 94.3% for the same period in 2018. 

Commercial Auto Insurance Underwriting Losses to Continue in 2019

U.S. property/casualty (p/c) insurers continue to face substantial underwriting losses on commercial automobile insurance, according to Fitch Ratings in a new special report. Following a statutory combined ratio of 108% in 2018, the segment is poised for a ninth consecutive year of underwriting losses in 2019, with only moderate results improvement anticipated.

Major Korean Insurers' Earnings May Remain Under Pressure

Their solvency position, measured by the local risk-based capital (RBC) ratio of the major life and non-life insurers, improved to about 320% and 286% by end-June 2019 (end-2018: 286% and 266%), respectively, on an aggregate basis.

Bermuda Treatment of Tier 3 Capital for (Re)Insurers Raises Questions

The Bermuda market continues to evolve with government efforts to maintain relevance and attractiveness as a (re)insurance domicile in a highly competitive global market.

Risk Management Key in Indonesia Credit Insurance Expansion

We believe credit insurance will continue to outgrow the overall insurance market as more banks and other financial institutions get familiar with, and benefit from, the credit insurance products.

Revised Expense Rules to Have Limited Impact on Korean Insurers

Korea's Financial Services Commission announced a comprehensive policy revision related to expenses of insurance companies, including the commissions paid to the agency channel, on 1 August 2019.

Auto Premium Hike to Support Japanese Non-Life Insurer Profits

A consumption tax hike from October 2019 will hurt non-life insurers' earnings by pushing up incurred losses, as auto and other repair costs as well as agency costs are taxable. Furthermore, a cut in the statutory interest rate associated with amendments to the civil code in April 2020 will increase insurance claim costs.

Asian Reinsurers Review Strategies amid High Competition

Reinsurance pricing was largely stable in Asia, except for areas where severe catastrophes occurred in 2018. The stability was due mainly to adequate capacity from traditional reinsurers and some access to alternative capital markets, such as insurance-linked securities (ILS).

U.S. Workers Comp On Track for Fifth Consecutive Year of Underwriting Profit

The U.S. workers compensation market is on track for a fifth consecutive year of underwriting profits in 2019 despite recent weakening in market fundamentals, according to Fitch Ratings. The industry's statutory combined ratio fell to 86% in 2018, and has averaged 93% annually since 2015. 
 

New Ogden Rate a Small One-Off Negative for UK Motor Insurers

The lower-than-expected Ogden discount rate announced today by the UK government is a small one-off negative for the country's motor insurers. It will mean slightly higher payouts on bodily injury claims, forcing many insurers to increase their reserves for settling claims. This will cause a small hit to earnings, which we expect insurers to quantify when they announce their 1H19 results in August.

China's New Rules Unlikely to Increase Insurers' Appetite for Trust Products

The new rules explicitly stipulate that insurers cannot use their investments in trust products to circumvent regulations for other purposes. Credit enhancements such as guarantees need to be arranged if the underlying assets of trust products are non-standard credit assets.

Lifting of Foreign-Ownership Cap to Have Little Impact on China Life Insurers

The move will attract more international insurers to China to tap the fast-growing market, but Fitch believes the large domestic companies have strong business profiles and credit fundamentals to ward off the increased competition. In 2018, the 28 life insurers that have foreign shareholders together held only 8% of the life market's direct premiums.

Chinese Non-Life Insurers to Seek Capital on Slower Surplus Growth

Chinese non-life insurers, especially those with small scale of operation, volatile underwriting margin and high growth dynamics, are likely to seek fresh capital. The liberalisation of commercial motor insurance premium rates will limit insurers' ability to improve their margins, leading to slower surplus growth.

Japan's Life Insurers Look to Foreign Bonds due to Low Domestic Yields

Fitch expects Japanese life insurers to continue to increase their allocation to foreign fixed-income assets, including those denominated in US dollars as well as other foreign currencies, to boost yields. 

U.S. Personal Lines Profits Improve Led by Auto Insurance Segment

U.S. personal lines insurance saw strong premium growth of 8% in 2018, says Fitch Ratings. The sector's statutory combined ratio of 99% for 2018 represents the market's best results since 2013, according to a new special report from Fitch. 
 

Cyber Insurance Growth Slows, Market Remains Untested

The cyber insurance market remains a source of growth for U.S. property/casualty insurers; however, that growth is slowing. The industry's total direct written cyber premiums grew 8% in 2018 to $2 billion, down from 37% growth in 2017. 

Austrian Life Insurance Market to Shrink for a Fourth Year

Austria's life insurance sector faces a fourth successive year of declining premium income in 2019, even if it is less pronounced than in 2016-2018. Profitability will remain under pressure as insurers bolster provisions amid low investment returns. In contrast, the non-life sector is relatively profitable and growing steadily.

Contacts

Global

Keith Buckley

Analytical Group Head

+1 312 368 3211

APAC

Jeff Liew

Analytical

+852 2263 9939

EMEA

Harish Gohil

Analytical

+44 20 3530 1257

LATAM

Eduardo Recinos

Analytical

+503 2516 6606

North America

Julie Burke

Analytical

+1 312 368 3158

Global

David Turner

Business Relationship Head

+44 203 530 1442

APAC

Mee Ryung Song

Business

+822 3278 8364

LATAM

Diego Alcazar

Business

+1 212 908-0396

North America

Brad Istwan

Business

+1 312 368 3197

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