LONDON, Nov 30 (Reuters) - Ratings agency Fitch raised its outlook for UK life insurers to stable on Thursday, from negative, citing a steady market for annuities and demand for savings and fund products.
Sales of annuities, which pay pensioners a fixed income for life, have dropped sharply since the introduction of new pension rules in Britain in 2015. The new rules give over-55s more flexibility over how they use their pension pots.
However, the number of firms offering annuities has also fallen, Fitch said.
“We expect sales for firms that remain in the market to be broadly stable in 2018,” the ratings agency said in a statement.
Insurers are also likely to increase sales of bulk annuities, which involve taking on the risk of company defined benefit, or final salary, pension schemes, Fitch said.
Insurers with large asset management units would benefit from “high growth potential compared with traditional life insurance,” Fitch said, although it added competition in the sector was tough.
Britain’s departure from the European Union would not have much impact, the agency said, despite the likely loss of passporting rights to sell insurance across the bloc, given most UK life insurers have a domestic focus.
“Those that operate in other EU countries typically do so via local subsidiaries that are already established and not dependent on passporting.” (Reporting by Carolyn Cohn; Editing by Susan Fenton)