Out­look for UK life in­surance sta­ble

The Pak Banker - - COMPANIES/BOSS -

The out­look for the UK life in­surance sec­tor has been changed to sta­ble from neg­a­tive, says Moody’s In­vestors Ser­vice in a new In­dus­try Out­look pub­lished to­day. The out­look change re­flects the rat­ing agency’s ex­pec­ta­tion of (1) sta­ble earn­ings; (2) con­ser­va­tive cap­i­tal man­age­ment; and (3) in­creas­ing in­come di­ver­sity from cap­tive as­set man­agers. How­ever, th­ese fac­tors are coun­ter­bal­anced by (1) po­ten­tial short-term dis­rup­tion from the Re­tail Distri­bu­tion Re­view (RDR); (2) the risks posed by in­sur­ers’ ex­pan­sion into “new” in­vest­ment ar­eas; and (3) the UK’s weak eco­nomic growth out­look for the next sev­eral years.

“The prof­itabil­ity of the UK life in­dus­try is sta­ble and sup­ported by grow­ing cash gen­er­a­tion. We ex­pect that the in­dus­try’s earn­ings will re­main healthy over­all, whilst earn­ings qual­ity will im­prove given the fo­cus on cash gen­er­a­tion,” said An­tonello Aquino, Moody’s Se­nior Vice Pres­i­dent and au­thor of the report. “The low in­ter­est-rate en­vi­ron­ment will grad­u­ally re­duce prof­itabil­ity, but only marginally, given the in­dus­try’s rel­a­tively low.

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