Fitch ranking institutions/sectors/regions most to least vulnerable to Covid-19

Written by Adam Cadle

16/03/2020

Fitch Ratings is ranking institutions and sectors and regions most to least vulnerable to the impact of the Covid-19 outbreak, as part of its portfolio assessment process.

Among the key factors in its assessment are the direct impact the outbreak may have on financial institutions’ operations; funding and liquidity pressures and market valuation losses; asset quality or market value declines; revenue pressures arising from lower business volumes; the impact on spread and investment earnings from depressed interest rates; lending and trading activities especially vulnerable to sharply lower oil prices; for insurance companies, the impact of stock market declines/volatility on investment values and capital and the impact of current or potential monetary policy easing, regulatory stimulus, or direct government or parent support.

“Within the insurance sector, we see the greatest risk with life insurers and health insurers,” it added.

“We are also working closely with out sovereign team to understand the potential impact of Coronavirus-related risks on sovereign ratings given the high degree of linkage between sovereigns and many financial institution ratings based on explicit or implicit support and for insurers in certain markets that hold very large portions of their investment portfolio in the debt of the local sovereign.”

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