Reflecting its continued negative view
of the UK’s life market, rating agency Moody’s Investors Service
has downgraded the insurance financial strength rating of one of
the country’s largest life insurers, Legal & General (L&G),
from Aa3 from Aa2.
The reason for its move, according to Moody’s,
is that the company expects any UK economic growth will be sluggish
and a high level of household indebtedness will limit life
insurance market growth opportunities in the near-term, negatively
impacting UK life insurers’ business and profitability growth.
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Moody’s said L&G relies on the UK market
for the vast majority of its business.
Specifically, L&G generated 92% of its
total premium income in 2009 in the UK life market.
However, Moody’s emphasised that L&G’s
ratings continue to reflect “very strong financial metrics” with
respect to profitability and financial flexibility.
L&G reported a net profit of £844m
($1.22bn) in 2009 compared with a loss of £1.13bn in 2008.
L&G’s net premium income in 2009 fell by
12.2% compared with 2008 to £4.71bn.
