In its latest report on the Australian and New Zealand
life insurance industry, Standard & Poors (S&P)
rating services has warned about the weak outlook.
life insurance industry continues to face volatile investment
markets and an uncertain economic and industry environment,
says Kate Thomson, credit analyst. We expect that
the industry in 2003 will face the same difficulties as
it did last year, with local and offshore pressures likely
to impact ratings.
2002, the life industry experienced significant declines
in global equity market values, which eroded capitalisation,
reduced fee income as funds under management contracted,
and lowered product revenue as consumers opted not to
purchase additional investment products, according to
the life insurance digest.
large number of insurance companies ratings were
lowered in 2002 (including AMP, Tower, and Royal &
Sun Alliance), and several life ratings remain on CreditWatch
highlighting ongoing difficulties faced by the industry
in 2003, adds Thomson.