Fitch adds London to insurance markets hit by virus concerns
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Fitch Ratings Inc. on Tuesday added the London market to the list of international insurance markets for which it moved its outlook to negative from stable over coronavirus concerns.
The move follows similar announcements by the rating agency on the U.S. property/casualty market and the global reinsurance market.
Falling stock prices, widening credit spreads and declining interest rates could all have a negative effect on London market insurers’ capital levels, the rating agency said in a statement.
“We expect the impact on underwriting performance to be more limited, with the biggest exposure coming from event cancellation, business interruption and accident & health lines. The low interest rates add to pressure on investment earnings from already ultra-low bond yields,” the statement said.
On Friday, Fitch also revised its sector outlook for the U.S. property/casualty market to negative from stable, due largely to investment market volatility.
While the insurance market has a very strong capital position, investment income is expected to decline with falling stock prices and lower bond yields, Fitch said in a statement Friday.
In addition, although U.S. insurers have benefited recently from increased premium rates, “A move towards an economic recession could alter premium growth trends through declines in insured exposures or renewed competitive pressure that restricts pricing momentum,” the statement said.
