Moody’s raises outlook for UK life insurance sector to stable

Written by Adam Cadle

06/07/2021

Moody’s Investors Service has raised its outlook for the UK life insurance sector to stable on the expectation that capital levels and earnings will remain robust over the next 12 to 18 months, as the UK economy recovers from the impact of the COVID-19 pandemic and the bulk annuity market remains buoyant.

The credit rating agency had lowered the outlook for the sector to negative a year ago at the start of the pandemic, as interest rates declined and credit spreads widened.

“In 2020, multiple lockdowns and a contracting economy reduced life insurance sales, although the decline was more moderate than anticipated,” said Helena Kingsley-Tomkins, a vice president and senior analyst at Moody’s.

“We expect demand for life insurance products to improve in 2021 as an easing of pandemic-related restrictions fuels an economic recovery.”

The industry outlook indicates a forward-looking assessment of fundamental credit conditions that will affect the creditworthiness of the life insurance industry over the next 12-18 months. The outlook does not represent a sum of upgrades, downgrades or ratings under review, or an average of the rating outlooks of issuers in the industry, but rather Moody’s assessment of the direction of credit fundamentals overall within the industry broadly.

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