Fitch Ratings has forecast a stable outlook for the UK life insurance sector in 2015, indicating that most ratings are likely to be affirmed in the next one to two years.
The stable outlook comes despite threats to profitability from a number of government initiatives on pensions and increased regulatory scrutiny into how insurers treat their customers.
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As an example of a government initiative on pensions, Fitch said as announced in the 2014 UK Budget, customers will no longer have to buy an annuity with their pension pots.
The ratings agency expects the £12bn-a-year ($18.3bn) annuity market to shrink by at least one-third as many savers will access their pensions as cash or via drawdown products instead.
However, in its report, ‘UK Life Insurance Dashboard – 2015 Outlook’, Fitch said most major insurers will be able to absorb the negative effects because they have diverse businesses and strong capital positions – important factors underpinning their credit ratings.
