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Fitch Ratings downgrades number of UK life insurers

Fitch Ratings has revealed that it has downgraded several UK life insurers in light of the ongoing pandemic. 

In its latest ratings switch, the agency revised Phoenix and ReAssure from positive to stable, while Just, Legal and General and Scottish Widows have moved to negative.

The other five ratings in its sample were maintained. Aviva, M&G, Pensions Insurance Corporation, and Rothesay Life remained stable, while Quilter remained negative

Nonetheless, the agency said that capitalisation and liquidity  “remained strong” across the group for the first quarter of 2020.

In its latest report, Fitch said: “We do not expect a significant impact on mortality claims as a result of the coronavirus deaths spike because mortality risk is largely reinsured.

“UK life insurers hold enough liquid assets to enable them to meet expected liquidity requirements including debt interest and maturities, dividends and collateral calls due to the robust liquidity risk management in place for most insurers.”

In addition, the agency noted that fixed-charge coverage ratio weekend last year in light of further debt issuances by UK life insurers. 

As earnings reduced under rating-case assumptions, fixed-charge coverage “weakened further but remained above the downgrade sensitivity for most insurers”.

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