Fitch Sees Negative Outlook for Near Term

The factors contributing to Fitch Ratings' negative outlook for the global insurance industry are unlikely to improve enough in the near term to allow for a revision to a stable outlook, the company reports.

Fitch describes the signs it will look for to signal an improvement including the strength of the economic recovery, improved capital access and financial flexibility, and greater certainty regarding investment valuations.

Throughout 2008, Fitch moved its rating outlooks for all segments and regions of the global insurance industry to negative. Continued mounting instabilities in the economic and operating environments have led Fitch to downgrade over 40 percent of its rated insurance groups since fourth-quarter of last year. Additionally, more than 60 percent of Fitch's rated insurance entities either have a negative outlook or on rating watch negative.

Investors and other market participants have increasingly asked when Fitch may revise outlooks on insurance company ratings to stable. In response, Fitch's report highlights the broad framework under which market conditions and other factors would be used to make a determination for any changes.

From a macroeconomic perspective, Fitch believes that the immediate economic crisis has passed with some signs of stabilization in the market. However, Fitch also notes that continued uncertainties make it unlikely that Fitch's negative outlook on the sector would change before the end of 2009 or even into 2010. Fitch notes also that some additional ratings on individual insurers would need to be downgraded before stabilization is appropriate.