Industry avoids downgrades in credit ratings.

The underlying performance of European insurers remains strong despite their exposure to poor performance in capital markets, Moody’s said this week.

In a special comment on insurance companies’ results for the first half (H1) of 2008, the ratings agency said the industry remained relatively robust and had avoided downgrades in credit ratings.

Dominic Simpson, Moody’s senior credit officer, said: “As major investors in global financial markets, Europe’s insurers are not immune to volatility or, of more concern, negative trends in these markets. Not all groups maintain the same levels of exposure to such events but their H1 2008 results confirm that falls in the value of bonds and equities can significantly impact both earnings and capital.

“Aside from depressed investment returns, the H1 2008 earnings of the major European insurance and reinsurance groups have been notable for the relatively strong performance of the underlying insurance business, in both life and non-life.

“This is in contrast to some other financial institutions.” Moody’s added that future movements in the capital markets could place pressure on insurers’ balance sheets.

First-half net incomes

Aegon €429m
Allianz €2,690m
AXA €2,162m
Generali €1,459m
ING €3,460m
Legal & General £(14m)
Munich Re €1,374m
Prudential £(116m)
Old Mutual £549m
Swiss Re CHF1,188m
Zurich $2,681m