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Uneven economic conditions challenge earnings growth for global insurers: report

According to Standard & Poor's Rating Services, insurers in many regions will have to deal with tighter capital standards, weak pricing due to excess capital or stricter controls on product design and distribution in some markets.

By Rosalie L. Donlon | Updated on April 03, 2015
Earnings growth for insurers overall should rise, but developing market insurers are likely to outpace those in more mature markets.

The global insurance industry is facing uneven economic conditions in many parts of the world, which will challenge earnings growth in 2015, according to a new report from Standard & Poor’s Ratings Services (SPRS). The report, “Pursuing Global Insurance Profitability Amid Tempered Economic Growth,” released on March 30, finds that widely varying prospects for economic growth from region to region and extraordinarily low interest rates—which are likely to stay lower for longer, particularly in the Eurozone—will make profitability even more difficult than it has been in recent years.

Insurers in many regions will have to deal with tighter capital standards, weak pricing due to excess capital or stricter controls on product design and distribution in some markets. SPRS expects sectors exposed to these elements—especially Western Europe life insurance and global property and casualty (P&C) reinsurance—to see negative rating actions outnumbering positive ones.

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