S&P positive on global multi-lines

International

In its latest review of the sector, rating agency Standard and Poor’s, while expressing some reservations, takes a largely positive view of the prospects of global multi-line insurers over the coming year. In “Industry Report Card: Global Multi-line Insurers Set To Ride Out Volatile Industry Conditions And Regulatory Changes In 2008,” the agency notes that the rating outlooks for nine out of the 11 groups covered by the report were currently stable. S&P also affirms its expectation that the rating outlooks of these large insurance groups would remain stable throughout the year. Additionally, the agency considers global multi-line insurers’ exposure to US sub-prime risks to be manageable. However, the agency stresses the importance of global multi-lines keeping abreast of regulatory and accounting changes around the world and also warns of the danger of company earnings losing momentum because of economic slowdowns, weaker financial markets, and soft pricing, particularly in property and casualty insurance. S&P says it would only consider negative rating actions with regard to global multi-lines should substantial asset impairments, credit losses, or significant claims from directors’ and officers’ policies and errors and omissions coverage disproportionately dampen 2008 earnings or capitalisation.