S&P: European insurers ‘well positioned’ for even no deal Brexit

European insurers are well positioned to manage the disruption caused by Brexit but, warns global ratings agency S&P, any wider global downturn will bring volatility, which is likely to mean persistent low interest rates.

In a report, S&P flag Brexit as “our key near-term concern for European credit markets”, but it said that even if there is a no deal Brexit it expects to see outlook revisions, rather than widespread rating downgrades, for UK insurers.

Pointing to the 2008 financial crisis, the agency said “insurers' management teams have steered companies through a difficult period of recession and low interest rates by enhancing their understanding and measurement of risk and building strong balance sheets and capital positions. As a result, European insurers are better prepared to face challenging economic conditions today than they were in 2008/2009.”
S&P points to increasingly sophisticated technology as the major disrupting force that could threaten the traditional insurance business model and warned that companies that fail to embrace this will “be left behind”.

However, the agency said that 80 percent of its outlooks are “stable and most rated insurers have a track record of coping with difficult conditions”.

The report, called ‘With European Insurers Well Positioned For Economic Uncertainty, Focus Shifts To Future’, was published today (13 February).

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