Risk industry gets report card approval
The Australian insurance industry is enjoying a ‘purple patch’ in what ratings house Standard and Poors (S&P) is deeming an improved operating environment this year, according its latest review of the sector.
AMP Lifeis one of the key businesses behind the research group’s favourable report for the sector.
“AMP has demonstrated further signs of a recovering competitive position in the current period,” S&P analyst Kate Thomson says.
Thomson says the revised outlook on AMP Life from ‘negative’ to ‘stable’ reflects the removal of uncertainties surrounding the broader group’s financial structure and stabilisation of its business profile following the demerger of its UK operations in late 2003.
According to the survey, Australia’s life insure sector has benefited from strengthening investment markets and improved consumer confidence levels, and this trend is likely to continue.
S&P’s Craig Bennett says that so far only two downgrades have occurred this year,MLCand MLC Lifetime but this was a reflection on the parent company National Australia Bank’s rating, rather than deterioration in life company strength.
This compares with four life insurance groups being downgraded in 2003 by the ratings house.
Following this period of downgrades, S&P had forecast a stable period of improving credit quality, noting that premiums in the risk segment of the market continue to grow, having provided some underpinning of life company earnings in 2003 at a time when profits from investment related products were restrained.
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