S&P Global Ratings said late Tuesday it has revised its outlook on the U.S. property/casualty sector to negative from stable on “expected weaker credit trends over the next 12 months” and “expects to “make negative revisions to the ratings or outlook” for some insurance companies, S&P said in a report.
According to S&P, insurers have seen rising interest rates reduce both the market value of property/casualty insurers’ fixed income portfolios and generally accepted equity accounting principles.
At the same time, declines in the value of stock holdings, increased natural disaster losses and deteriorating personal auto insurance results have squeezed net profits for some insurers, S&P said.
The rating agency said it expects to “make negative revisions to the ratings or outlook for those insurers whose capitalization has fallen materially below our expectations and whose projected earnings and capital management options, in our view, will be insufficient to rebuild capitalization to a consistent level with our current ratings over the next 24-36 months,”; John Iten, principal credit analyst at S&P Global Ratings, said in the report.
S&P analysts will update their assessment of capital and earnings as insurers report their third-quarter results, the rating agency added.
This report does not constitute a rating action, S&P said.