Fitch Ratings has published a review of its ratings on insurers in Australia and New Zealand in the light of the impact of the coronavirus pandemic.

The review includes nine insurers including insurance groups. The Insurer Financial Strength (IFS) ratings on six of the insurers were affirmed with stable outlooks. The IFS ratings on two others were affirmed, but the outlooks were revised to negative from stable. The rating on the last insurer was downgraded and remained on negative outlook.

“Fitch expects the insurers’ financial performance and earnings to deteriorate as a result of the economic fallout from the pandemic, especially via higher claims and lower investment yields,” the agency said.

“In particular, Fitch took negative rating actions on insurers that were more exposed to the deteriorating economic conditions, including a lenders’ mortgage insurer as well as an insurance group with banking exposure, which would be affected by higher unemployment and a worsening housing market.

“Increasing employee retrenchments could also lead to higher redundancy claims for some insurers.”

Fitch expects the capital strength of the insurers to remain stable “despite the pandemic shock”.

The rating actions for the insurance companies’ public IFS Ratings were as follows:

Ratings Affirmed with Stable Outlooks

• QBE Insurance Group’s Issuer Default Rating (IDR) affirmed at A- and QBE’s core subsidiaries’ IFS Ratings affirmed at A+ (Strong).
• AIA New Zealand Limited”s IFS Rating affirmed at AA (Very Strong).
• ClearView Wealth Limited's IDR affirmed at BBB and ClearView Life Assurance Limited's IDR affirmed at BBB and IFS Rating affirmed at BBB+ (Good).
• First Insurance Limited's IFS Rating affirmed at BB+ (Moderately Weak).
• MARAC Insurance Limited's IFS Rating affirmed at BB+ (Moderately Weak).
• Manchester Unity Friendly Society's IFS Rating affirmed at BB- (Moderately Weak).

Ratings Affirmed with Outlooks Revised to Negative from Stable

• Suncorp Group Limited's IDR affirmed at A+, and AAI Limited's IDR affirmed at A+ and IFS Rating affirmed at AA- (Very Strong).
• Southsure Assurance Limited's IFS Rating affirmed at BBB+ (Good).

Ratings Downgraded with Outlook Remaining Negative

• Genworth Financial Mortgage Insurance Pty Limited's IFS Rating downgraded to A (Strong) from A+ (Strong).