Best’s News & Research Service - April 06, 2020 07:54 AM (EDT)
Best’s Market Segment Report: AM Best Revises UK Life Outlook to Negative
- April 06, 2020 07:54 AM (EDT)
London //BestWire// - AM Best is revising its market segment outlook to negative for the United Kingdom life insurance segment. Key factors that have led to the change in outlook include material uncertainty as to the severity of the impact on capital positions of the COVID-19-driven financial market volatility, pressure on earnings due to equity market declines and the low interest rate environment and increased risk of corporate bond default due to deteriorating economic conditions.
A new Best’s Market Segment Report, titled, “Market Segment Outlook: UK Life,” notes these factors are partially offset by medium-term growth opportunities focused on annuities and defined contribution (DC) pensions. However, the near-term bulk annuity pipeline is likely to be affected by market volatility, and DC pension fund values will be depressed. A higher allocation to illiquid assets is supporting investment yields, but is leading to higher investment risk and default and valuation uncertainty has increased for these assets.
The outlook notes that assets and liabilities are generally well-matched by duration, reducing U.K. life insurers’ sensitivity to interest rate movements, and that U.K. life insurers generally display sophisticated enterprise risk management.
To access a complimentary copy of this market segment outlook, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=296013 .
To view current Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp .
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.