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S&P Global Ratings late Tuesday said it has revised its view on the U.S. property/casualty sector to negative from stable on “expected weaker credit trends over the next 12 months,” and “expects to “make negative revisions to the ratings or outlooks” of some insurers, S&P said in a report.
According to S&P, insurers have seen rising interest rates reduce both the market value of property/casualty insurers’ fixed income portfolios as well as generally accepted accounting principles shareholders’ equity.
At the same time, declines in the value of equity holdings, elevated natural catastrophe losses, and deteriorating personal auto underwriting results have pressured the net earnings of some insurers, S&P said.
The ratings agency said it expects to “make negative revisions to the ratings or outlooks of those insurers whose capitalization has fallen materially below our expectations and whose projected earnings and capital management options, in our view, will be insufficient to rebuild capitalization to a level consistent with our current ratings over the next 24-36 months,” John Iten, primary credit analyst with S&P Global Ratings, said in the report.
S&P analysts will be updating their assessment of capital and earnings, as insurers report their third-quarter results, the ratings agency added.
This report does not constitute a rating action, S&P said.