Fitch goes negative on US P&C insurance outlook due to COVID-19 concerns
US property/casualty (P&C) insurance sector outlook has been revised to negative from stable by Fitch Ratings. The revision is due to increased concerns over coronavirus (COVID-19), and related impacts on near term performance and the credit quality of insurers.
According to the early stage analysis, Fitch believes that the ratings of US P&C insurers will be less impacted by the coronavirus pandemic than those of life and health insurance sectors, which have recently been revised to negative. Hence, outlook for ratings levels in the sector remains stable for now.
However, Fitch warned that ratings will be placed on rating watch negative or downgraded as the situation evolves, but currently viewed as unlikely.
The agency explained that US P&C sector benefits from a very strong capital position. "The industry reported an underwriting profit for the last two consecutive years, and an estimated 10%+ growth in surplus in 2019 on stable earnings and higher unrealized investment gains."
"New challenges to performance arise in 2020 with the coronavirus pandemic and recent shifts in investment market and economic conditions," Fitch added. "Companies with significant allocations to equity investment will see capital declines in the next quarter and investment income will decline YoY with lower bond yields.
According to Fitch, claims experience from these events is not anticipated to significantly increase loss ratios in the near term, but as the duration and severity of the crisis lengthens uncertainty regarding future sources of underwriting losses expands.
"Insurers have benefited from favorable recent premium rate movement across the broader commercial lines spectrum. 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 agency said.
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Copyright © intelligentinsurer.com 2024 | Headless Content Management with Blaze