The last couple of weeks have been busy for those of us following the Eurozone crisis and its impact on the insurance world. Standard & Poor’s released its eagerly anticipated views on the Eurozone sovereigns, followed by a flurry of downgrades to the insurer financial strength ratings.
In truth most market commentators were largely unsurprised by S&P’s actions, and our sense remains that, for the most part, the insurance sector remains resilient. Those S&P ratings that did change this week all moved due to the complex principles of ‘capping’ that the rating agencies apply to deal with the differing degrees of sovereign stress that clearly impact creditworthiness. There are a number of exceptions to the cap rules, which our briefing note explains, using S&P’s criteria as its base for explanation.
Whilst a few big names have seen some movements in their ratings last week, it is worth noting that S&P have explicitly reminded us that some group reviews are not yet completed—so watch this space. And of course the other rating agencies may yet comment in either more positive or negative terms. Interesting times.
Willis Market Security is closely monitoring the Eurozone situation as well as the implications on individual carrier groups. Willis Market Security provides the above information in the context of client assessment of insurance carriers only and such information should not be construed as investment advice.