Asia insurers’ profits to significantly erode next year
TThe Star, Thursday, October 9, 2008, KUALA LUMPUR: Asia's insurance industry has sufficiently strong fundamentals to withstand the current turmoil in the world's financial markets, but profitability will be significantly eroded over the next year.
Standard & Poor's Ratings Services said in a report issued on Thursday that the industry's operating performance “is likely to deteriorate in 2008, and some companies may even report losses, due to plummeting investment profits, slowing new-business sales, and falling confidence among policyholders.”
“But we expect the rated insurers that have strengthened their balance sheets over the past five years to ride out the storm without major rating changes and believe that the sector's strong growth potential will remain intact over the medium term," said S&P's credit analyst Connie Wong.
Her comments were contained in a report, titled "Asia's insurance industry can shake off the negative effects of the recent market turmoil". Following a full review of five markets with rated insurers, S&P revised the outlooks on Singapore and Taiwan's life insurance sectors to negative from stable.
The move was to reflect the combined effects of investment market volatility and less-optimistic business prospects, which we believe will dampen the performances of their domestic players more significantly than in other regional markets over the coming year.
"The capitalisation of most rated insurers has been hit by declining profits or a reduction in investment evaluation reserves. However, we believe these setbacks are still manageable and will not affect most ratings due to adequate capital levels for the current ratings. But if market conditions deteriorate, insurers that have thin capital buffers will prove vulnerable," said Wong.
Source from: The Star Online, 9 October 2008
URL:
http://biz.thestar.com.my/news/story.asp?file=/2008/10/9/business/20081009155158&sec=business |
