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February 25, 2020 at 07:18 PM
Life insurance rating analysts at S&P Global Ratings are watching the news about the new coronavirus outbreak, but, at this point, they are talking much more about other potential threats.
Neil Stein, a director at S&P Global Ratings, today spent most of his time during an S&P Global U.S. insurance sector earnings and credit update discussing concerns about low interest rates, and the possibility that some of life insurers’ investments could go bad.
Even if the United States experienced a coronavirus outbreak as severe as the 1918 flu pandemic, “that would be manageable, considering insurers’ overall financial strength,” Stein said.
(Related: How 6 Regions’ Insurance Investment Managers Rate Geopolitical Risk)
S&P organized the update to give investors and others a look at how the firm’s analysts see the U.S. insurance sector.
S&P rating analysts’ views matter because S&P credit ratings affect companies’ ability to borrow money.
S&P insurer financial strength ratings affect insurers’ ability to write insurance.
S&P recently issued a report on pandemic risk. S&P analysts concluded that an epidemic similar to the 1957 Asian flu pandemic could lead to about $7 billion in extra U.S. mortality claims and eat up about 2% of U.S. life industry capital.
