Understanding Rating Drivers During Uncertain Times
These are changing times for the (re)insurance sector, a point that is increasingly reflected in the
busy agenda of ratings agencies, insurance supervisors, regulators and policy makers. Macro-economic
volatility, climate change, emerging risks and market uncertainties are all on their radars, with
potential implications for (re)insurer capital and credit ratings. The annual Evolving Criteria
report highlights the most important developments to help insurers stay informed on the pressing
changes to the credit rating and regulatory environment that may impact their rating position and
Five things you need to know
1 Rating agencies are
currently assigning “stable” outlooks to most industry segments, reflecting positive
underwriting fundamentals in the hardening market and strong capital positions for most
2 The global
macroeconomic environment is a key area of focus for ratings agencies. Rising interest rates,
declining equity markets and bond values lead to considerable reductions of available
(re)insurer capacity in the first half of 2022.
3 Rating agencies
continue to refine rating methodologies and criteria to reflect changes in the market and as
they integrate Environmental, Social and Governance (ESG) factors into the ratings process.
4 Standard & Poor’s is
expected to announce revised proposals to their capital model criteria no earlier than the
fourth quarter of 2022.
5 On the regulatory
front, insurance supervisors and financial market regulators are also focusing on ESG,
developing guidelines and reporting requirements such as disclosing greenhouse gas emissions and
climate change risks.