UK life insurance outlook improving

Written by Adam Cadle

29/11/2021

The UK life insurance sector outlook for 2022 is improving, driven by the more favourable operating environment for the sector as the economy recovers following pandemic-induced weakness, Fitch Ratings has said.

Fitch said, however, that UK life insurers remain exposed to the risk of low interest rates, mostly through the impact of low interest rates on their profits. “We expect them to have limited exposure to rising inflation, because of largely hedged inflation-linked liabilities and limited impact from expense base growth,” it stated.

Insurers’ exposure to credit risk is expected to remain moderate and corporate defaults low and manageable.

Further growth is expected in net inflows for most UK asset and wealth managers, supported by strong demand for workplace retirement savings and overall economic recovery.

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