NU Online News Service, Aug. 8, 1:11 p.m. EDT

Insurers and reinsurers will not be impacted by Standard & Poor's U.S. sovereign rating downgrade, says the president of the Insurance Information Institute (I.I.I.).

I.I.I.'s Robert Hartwig cites three reasons for the lack of impact on insurers:

  • First, the National Association of Insurance Commissioners (NAIC) issued a statement saying there would be no impact on insurers' investments and that risk-based capital and asset valuation reserves would be unaffected. Hartwig says that means insurers do not have to worry about putting up more cash for reserves.
  • Second, U.S. Treasury accounts for 6 percent of invested assets, making it a minor position in the overall financial picture for insurers.
  • Third, the downgrade has no impact on the solvency of insurers' liquidity and their claims-paying ability.

Hartwig says Friday's action by S&P to downgrade the U.S. sovereign rating by one notch from "AAA" to "AA+" is "trivial" compared to the market disruptions three years ago, and he adds that Treasury bonds still remain the "safest security in the world" for investors.

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