S&P revises outlook on US life insurers to negative
NEW YORK, Oct 10 (Reuters) - Standard & Poor's on Friday said it is revising its outlook on the U.S. life insurance sector to "negative" from "stable" as it expects higher-than-usual credit losses and lower fee-based revenues as a result of the current turmoil in financial markets.
"We expect to revise the ratings or outlooks on several life insurers in the next few months because of the impact of these challenging macroeconomic conditions," S&P analyst Kevin Ahern said in a statement.
Still, although short-term pressures are significant, the industry's long-term fundamental strengths remain intact, he said.
"Therefore, at this time, we expect most downgrades should be one to two notches at the most," he said.
The cost of insuring debt issued by U.S. life insurers continued to rise Friday. Five-year credit default swaps on Allstate (ALL.N) were last trading at 292 basis points, or $292,000 annually to insure $10 million for five years, up from 199 basis points late Thursday, according to data from Markit Intraday.
MetLife (MET.N) and Hartford Financial (HIG.N) CDS were trading upfront, a sign of distress and heightened worry of a potential default. (Reporting by Ciara Linnane; Editing by Theodore d'Afflisio)
