Rating agency revises outlook for reinsurers on virus impact
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Fitch Ratings Inc. on Friday changed its outlook for the reinsurance sector to negative from stable due to increased concerns over financial markets volatility amid the spread of COVID-19.
The rating agency said in a statement that it is reviewing ratings relative to the effect of the pandemic on “capital markets volatility, interest rates, market liquidity and insured claims/reserves.”
The reinsurance sector has recently benefited from increased pricing, strong capital, robust risk management and “generally solid business profiles,” the statement said.
In addition, underwriting losses from the coronavirus are likely manageable for reinsurers because of a relatively small number of exposed coverage lines and the use of policy limits, sublimits and exclusions, Fitch said.
“Even prior to the recent coronavirus events, however, the sector faced pressures from a competitive market environment and low investment yields that limited profitability,” the statement said.
More insurance and risk management news on the coronavirus crisis here.
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