Standard & Poor’s perspective on Swedish insurance sector risks

Article author: Alexander Altinisik
Position: Associate Director
Organization: Standard & Poor's

Associate Director, Nordic Insurance Ratings

2, 2014
Language: English

In May 2013, Standard & Poor's published new insurance criteria. Their objective with the new criteria is to improve the transparency of their criteria and provide the market with greater insight about how we rate insurers through a globally consistent criteria framework.

The criteria include a new factor, the insurance industry and country risk assessment (IICRA). Our IICRAs allow a deeper evaluation of the industry and country risks insurers face, which we assess for almost 100 insurance markets across the globe on a consistent basis. The Swedish Life and Property/Casualty (P/C) insurance sectors carry low risk IICRAs, in our view. Nevertheless, the sectors still face various risks, particularly from low interest rates. Standard & Poor's believe the life insurance sector is somewhat riskier than the P/C sector, mainly because of asset-liability mismatches that could trigger volatile returns. They anticipate interest rates to gradually improve, but to remain low, leading P/C insurers to keep focusing on underwriting profitability and life insurers to continue de-risking the balance sheet and shifting focus towards less capital-intensive products.

Find the full article below (pdf).