Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Global Credit Research - 10 Mar 2010
New York, March 10, 2010 -- After applying its new stress-test liquidity model, Moody's
Investors Service has concluded that the liquidity profile, in terms
of assets and liabilities, of most life insurers globally was sufficiently
ample to weather a severely stressed liquidity event, which has
been the prominent cause of several insolvencies over the past several
decades. Notably, the Liquid Assets/Liquid Liabilities (LA/LL)
ratio, one of the key measures in the new liquidity stress test,
will replace the current liquidity metric in the global life insurance
scorecard when the rating methodology is updated later this year.
According to the rating agency, even 2008's significantly
depressed market values of life insurer investments, combined with
further stress testing of both asset values and policyholder liquidity
demands, were not enough to move the results materially, or
to change Moody's earlier analytic opinion that life insurers globally
have very strong liquidity.
Liquidity concerns intensified during the credit crisis, largely
because of the substantial unrealized losses carried on the balance sheets
of most life insurers at the end of 1Q09, but also because of constrained
capital market liquidity. To aid in its stress-testing approach
in rating life insurers, Moody's developed a global liquidity
stress test for life operating companies -- one that leverages
the framework of the existing U.S. liquidity model.
"Our test results showed that there were significant variations
by region," says Senior Vice President Joel Levine,
adding that "the lowest ratio of any life insurance group was 144%,
which we regard as healthy, so we view operating company liquidity
as being strong overall, worldwide."
The analyst pointed out that U.S. life insurance groups
exhibited the lowest liquidity, with a median LA/LL ratio of 208%
--while Asia (excluding Japan) displayed the highest,
at 331%, with the United Kingdom a close second at 310%.
The underlying assumptions were designed to be very conservative,
reflecting a company-specific stress event. Moody's
two key objectives were: 1) to ensure global consistency in the
implementation of the test, based primarily on non-public
information; and 2), for the stress test results to be used
primarily as a relative ranking tool .
According to Mr. Levine, "the model stress results
are also subject to analyst interpretation, as well as to other
relevant information, including company-provided data."
The report is titled "Moody's Global Liquidity Stress Test for Life
Insurance Operating Companies."
* * *
NOTE TO JOURNALISTS ONLY: For a copy of this report, please
contact New York Press Information +1-212-553-0376;
or EMEA Press Information in London +44-20-7772-5456.
Also contact: Juan Pablo Soriano in Madrid +34-91-310-1454;
Alex Cataldo in Milan +39-02-914-81-100;
Eric de Bodard in Paris +331-5330-1076; Detlef
Scholz in Frankfurt +49-69-707-30-700;
Mardig Haladjian in Limassol +357-25-586-586;
Alex Sazhin in Moscow +7495-228-6060; Petr Vins
in Prague +4202 2422 2929; Tokyo Press Information +813-5408-4110;
Hilary Parkes in Toronto +1-416-214-1635;
Hong Kong Press Information +852-2916-1150; Hector
Lim in Sydney +612 9270 8102; Luiz Tess in São Paulo
+5511-3043-7300; Alberto Jones Tamayo in Mexico
City +5255-1253-5700; Daniel Rúas in Buenos
Aires +54 11-4816-2332 ext. 105; Craig
Jamieson in Johannesburg +27-11-217-5470;
Jehad el-Nakla in Dubai +971 4 401 9536; or visit our
web site at www.moodys.com
New York
Joel Levine
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Robert Riegel
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's: life insurers' liquidity sufficient for stress events
No Related Data.
© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable, including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy." For Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail clients. It would be dangerous for retail clients to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser.
|
|