tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, May 29th, 6:34PM

Insurance

rss
Latest Headlines

S&P paints a poor picture

Ratings agency Standards & Poor is tipping more takeovers and mergers in the New Zealand insurance industry.

Thursday, May 9th 2002, 10:26PM

It says the industry is languishing due to a low national savings rate and few tax incentives for superannuation products.

Some parts of the market, such as single premium business, are in decline while annual premium business is only rising slightly.

Also trust-based products become more popular with consumers, compared to risk ones.

S&P says this situation has intensified competition between insurers, with added pressure coming from the large number of small life insurers also struggling for scale in a flat market.

It says companies will reassess their long-term prospects in the face of a poor outlook for business volumes and profits.

Three of the other big issues insurers face are:

  • Companies writing substantial amounts of capital-guaranteed business might find their capital levels come under pressure if asset prices continue to fall.
  • Profits are expected to decline as funds under management shrink due to lower inflows and falling asset values.
  • The current uncertain economic environment is changing consumer preferences towards less risky products. This might lead to lower in-flows for investment-related products.

S&P says life insurers are increasingly relying on equity investments to meet their revenue and profit targets and about 58% of life company assets are now in this area.

This situation "exposes the very resources held to protect against insurance risk to further volatility," it says.

The relatively positive economic environment in recent years, together with increased pressure on life companies to boost shareholder returns, has encouraged many life offices to reduce their capital levels, it says.

In some cases this trend had gone too far, and has led S&P to downgrade insurers’ credit ratings.

* Royal & SunAlliance is reported to be on the market at present. To find out who might buy the business and why read the latest issue of Asset magazine. To get your copy click here

« Letter: AIA disputes PlanTech's findingsComparing health insurance policies »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Insurance Briefs

Fitch runs Covid-19 ruler over industry
AIA has had its Fitch rating affirmed with a stable outlook, while Suncorp is affirmed with outlook revised to negative.

MDRT waives production requirements
MDRT has waived production requirements for its members this year.

Rating agency gives Partners the tick; Here's what it said
A M Best says Partners Life has a very strong balance sheet and has continued to award its current rating.

Hardship fund for Asteron customers
Suncorp is establishing a $2 million hardship fund for Vero and Asteron Life customers.

News Bites
Latest Comments
Subscribe Now

Cover Notes - Specific news aimed at risk advisers

Previous News

MORE NEWS»

Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com