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.

Recommended For You

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
  • Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
NOT FOR REPRINT

© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.