Moody’s raises outlook for UK life sector on lower Brexit impact
Moody's Investors Service has changed the outlook for the UK life insurance industry to stable from negative on the expectation of a moderate and manageable impact from Brexit.
Furthermore, low interest rates are not a key risk for UK life insurers, according to the ratings agency. However, the life industry's margins could be pressured by ongoing regulatory probes.
"Our stable outlook primarily reflects our base scenario that Brexit's impact on UK life insurers will be moderate over the next 12 to 18 months, given the resilience of the UK's economy and financial markets following last year's referendum," said Dominic Simpson, vice president - senior credit officer at Moody's.
"Furthermore, we don't expect the loss of 'passporting' to be a material issue for the industry," he added.
The passporting mechanism provides a company authorised in one member state with the ability to conduct cross-border business without being required to apply for any additional authorisation or hold assets locally.
"However, we recognize that material uncertainty remains and that there are clear downside risks to our base case," Simpson noted.
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