This article presents S&P Global Ratings' insurance industry and country risk assessments (IICRAs) for 103 insurance sectors covering 52 countries and four global sectors (see tables 1-5). We review these IICRAs by applying our criteria "Insurers Rating Methodology," published July 1, 2019. In addition, the article lists the top key risks of each sector, which we classify in 10 different categories:
- Investment performance risk;
- Exposure to high-risk assets;
- Country risk;
- Intense competitive environment;
- Muted market growth prospects;
- Weak technical results;
- Exposure to natural catastrophes;
- Litigious legal system;
- Government and regulatory policy risks; and
- Foreign exchange impact
Where some risks do not fit any of these categories, we have selected "other".
Latest Actions
Since our most recent publication ("Insurance Industry And Country Risk Assessment Update: August 2020," published Aug. 10, 2020), we have:
Revised Portugal's property/casualty (P/C) IICRA to intermediate from moderately high risk following a revision of our industry risk assessment to moderately low from moderately high. The sector has structurally improved its profitability metrics to satisfactory levels since 2018. Although the sector's solvency ratios still rely on transitional measures, they have also improved in recent years. We expect the sector's performance to remain resilient in 2020-2021, despite the negative impact of the COVID-19 pandemic, because Portuguese P/C insurers have only limited exposure to claims related to the pandemic or lockdowns.
In this report, we also publish our assessment of the country and industry risks to which insurers are exposed.
About Insurance Industry And Country Risk Assessments
An insurer's business risk profile forms one of the key components of our rating analysis. It measures the risk inherent in the insurer's operations, which affects the sustainable return that may be derived from those operations. The business risk profile is based on our analysis of an insurer's competitive position, modified to incorporate the industry and country risks to which a specific insurer is exposed.
Each IICRA addresses the risks typically faced by all the insurers that operate in a specific industry and country. To determine the IICRA, we apply our "Country Risk Assessment Methodology And Assumptions," published Nov. 19, 2013, to assess country risk, and then modify it according to our view of industry risk. We assess country risk on a scale from strongest (very low risk) to weakest (very high risk).
We assess industry risk on a four-point scale from low to high. Our analysis of industry risk addresses the level, volatility, and sustainability of profitability in a given industry sector. The primary factor in our industry risk analysis is an assessment of prospective profitability, supplemented by a holistic analysis of factors that, in combination, are likely to either support or threaten industry profitability prospects, such as barriers to entry, market growth prospects, product risk, and the institutional framework.
The impact of IICRAs on our ratings varies according to the degree of risk. The higher the risk, the greater the adverse impact on the business risk profile. The risks are categorized as 1-very low, 2-low, 3-intermediate, 4-moderately high, 5-high, or 6-very high.
Within each country, if applicable, we separately assess the life and P/C sectors. Where it has a distinct legal and regulatory framework, we assess the health sector separately. In addition, in certain countries, we assess the insurance industry and country risk for the bond, mortgage, and title insurance sectors.
Some sectors are more naturally global, because insurers in those sectors typically write business in multiple countries around the world. Consequently, we assess IICRAs globally for life reinsurance, P/C reinsurance, trade credit insurance, and marine protection and indemnity insurance.
Chart 1
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Table 1
| Property/Casualty Insurance Industry And Country Risk Assessments On Nov. 17, 2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Country Risk | Industry Risk | IICRA | Top Risk 1 | Top Risk 2 | Top Risk 3 | |||||||||
| Angola | Very high | High | Very high risk | Forex impact | Muted market growth prospects | Investment performance risk | ||||||||
| Very high | High | Very high risk | Weak technical results | Country risk | Muted market growth prospects | |||||||||
| Very low | Low | Low risk | Exposure to natural catastrophes | Muted market growth prospects | Investment performance risk | |||||||||
| Low | Moderately low | Low risk* | Intense competitive environment | Exposure to natural catastrophes | Investment performance risk | |||||||||
| High | Moderately high | High risk | Investment performance risk | Muted market growth prospects | Country risk | |||||||||
| Bahrain | High | Moderately low | Moderately high risk* | Country risk | Intense competitive environment | Investment performance risk | ||||||||
| Low | Moderately low | Intermediate risk | Intense competitive environment | Exposure to natural catastrophes | Investment performance risk | |||||||||
| Moderately high | Moderately low | Moderately high risk | Muted market growth prospects | Country risk | Investment performance risk | |||||||||
| Very low | Moderately low | Low risk | Muted market growth prospects | Exposure to natural catastrophes | Investment performance risk | |||||||||
| Moderately high | Moderately low | Intermediate risk* | Intense competitive environment | Exposure to high risk assets | Weak technical results | |||||||||
| Moderately high | Moderately high | Moderately high risk | Weak technical results | Country risk | Muted market growth prospects | |||||||||
| Czech Republic | Intermediate | Moderately low | Intermediate risk | Government and regulatory policy risks | Intense competitive environment | Exposure to natural catastrophes | ||||||||
| Very low | Low | Low risk | Investment performance risk | Exposure to high risk assets | ||||||||||
| Very low | Low | Low risk | Investment performance risk | Exposure to high risk assets | ||||||||||
| Low | Moderately low | Intermediate risk | Intense competitive environment | Government and regulatory policy risks | Investment performance risk | |||||||||
| Very low | Moderately low | Low risk | Intense competitive environment | Exposure to natural catastrophes | Investment performance risk | |||||||||
| Low | Moderately low | Low risk* | Intense competitive environment | Muted market growth prospects | Government and regulatory policy risks | |||||||||
| Low | Moderately high | Intermediate risk | Litigious legal system | Intense competitive environment | Exposure to high risk assets | |||||||||
| Israel | Intermediate | Moderately low | Intermediate risk | Investment performance risk | Intense competitive environment | Government and regulatory policy risks | ||||||||
| Moderately high | Moderately low | Intermediate risk* | Country risk | Government and regulatory policy risks | ||||||||||
| Low | Moderately high | Intermediate risk | Exposure to high risk assets | Exposure to natural catastrophes | Muted market growth prospects | |||||||||
| Jordan | High | Moderately low | Moderately high risk* | Country risk | Weak technical results | |||||||||
| High | Moderately low | Moderately high risk* | Country risk | Muted market growth prospects | Investment performance risk | |||||||||
| Kenya | High | High | High risk | Forex impact | Weak technical results | Exposure to high risk assets | ||||||||
| Low | Moderately low | Intermediate risk | Investment performance risk | Weak technical results | Intense competitive environment | |||||||||
| Moderately high | Moderately low | Intermediate risk* | Government and regulatory policy risks | Exposure to high risk assets | Country risk | |||||||||
| Malaysia | Intermediate | Moderately low | Intermediate risk | Muted market growth prospects | Intense competitive environment | Government and regulatory policy risks | ||||||||
| Moderately high | Moderately low | Intermediate risk* | Country risk | Investment performance risk | Forex impact | |||||||||
| Morocco | Moderately high | Moderately low | Moderately high risk | Weak technical results | Forex impact | Investment performance risk | ||||||||
| Very low | Moderately high | Intermediate risk | Intense competitive environment | Exposure to natural catastrophes | Investment performance risk | |||||||||
| Low | Moderately low | Intermediate risk | Exposure to natural catastrophes | Investment performance risk | Muted market growth prospects | |||||||||
| Very low | Low | Low risk | Investment performance risk | Exposure to high risk assets | ||||||||||
| Poland | Moderately high | Moderately low | Moderately high risk | Intense competitive environment | Country risk | Exposure to natural catastrophes | ||||||||
| Portugal | Intermediate | Moderately low | Intermediate risk | Weak technical results | Investment performance risk | |||||||||
| Intermediate | Moderately low | Intermediate risk | Exposure to high risk assets | Weak technical results | Country risk | |||||||||
| High | Moderately high | High risk | Muted market growth prospects | Country risk | Investment performance risk | |||||||||
| Moderately high | Moderately low | Intermediate risk* | Country risk | Intense competitive environment | Government and regulatory policy risks | |||||||||
| Singapore | Very low | Low | Low risk | Intense competitive environment | Muted market growth prospects | Weak technical results | ||||||||
| Intermediate | Moderately low | Intermediate risk | Other | Exposure to natural catastrophes | Muted market growth prospects | |||||||||
| Moderately high | Moderately low | Moderately high risk | Muted market growth prospects | Country risk | Forex impact | |||||||||
| Intermediate | Low | Low risk* | Investment performance risk | Other | Government and regulatory policy risks | |||||||||
| Very low | Low | Low risk | Investment performance risk | Exposure to high risk assets | ||||||||||
| Switzerland | Very low | Low | Very low risk* | Other | Forex impact | Investment performance risk | ||||||||
| Intermediate | Low | Intermediate risk | Exposure to natural catastrophes | Investment performance risk | Intense competitive environment | |||||||||
| Thailand | Moderately high | Moderately low | Intermediate risk* | Exposure to natural catastrophes | Intense competitive environment | Muted market growth prospects | ||||||||
| Turkey | High | Moderately high | High risk | Weak technical results | Forex impact | Country risk | ||||||||
| Intermediate | Moderately low | Intermediate risk | Exposure to high risk assets | Intense competitive environment | Country risk | |||||||||
| Low | Moderately high | Intermediate risk | Litigious legal system | Government and regulatory policy risks | Country risk | |||||||||
| Very low | Moderately high | Intermediate risk | Litigious legal system | Investment performance risk | Exposure to natural catastrophes | |||||||||
| *Indicates those where the IICRA is one category lower than the IICRA indicated in table 5 in Insurers Rating Methodology. | ||||||||||||||
Table 2
| Life Insurance Industry And Country Risk Assessments On Nov. 17, 2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Country Risk | Industry Risk | IICRA | Top Risk 1 | Top Risk 2 | Top Risk 3 | |||||||||
| Australia | Very low | Moderately low | Low risk | Weak technical results | Government and regulatory policy risks | Intense competitive environment | ||||||||
| Low | Moderately high | Intermediate risk | Country risk | Investment performance risk | Muted market growth prospects | |||||||||
| Low | Moderately high | Intermediate risk | Investment performance risk | Government and regulatory policy risks | ||||||||||
| Moderately high | Low | Intermediate risk | Muted market growth prospects | Country risk | Investment performance risk | |||||||||
| Very low | Moderately low | Very low risk* | Country risk | Investment performance risk | Weak technical results | |||||||||
| Moderately high | Moderately low | Intermediate risk* | Investment performance risk | Exposure to high risk assets | Weak technical results | |||||||||
| Moderately high | Moderately high | Moderately high risk | Investment performance risk | Country risk | Muted market growth prospects | |||||||||
| Czech Republic | Intermediate | Low | Intermediate risk | Government and regulatory policy risks | Muted market growth prospects | Country risk | ||||||||
| Very low | Moderately high | Intermediate risk | Investment performance risk | Exposure to high risk assets | ||||||||||
| Very low | Moderately high | Intermediate risk | Investment performance risk | Exposure to natural catastrophes | ||||||||||
| Low | Moderately low | Low risk* | Investment performance risk | Government and regulatory policy risks | Investment performance risk | |||||||||
| Very low | Moderately high | Intermediate risk | Country risk | Investment performance risk | ||||||||||
| Low | Low | Low risk | Other | Investment performance risk | Weak technical results | |||||||||
| Israel | Intermediate | Moderately low | Intermediate risk | Investment performance risk | Other | |||||||||
| Moderately high | Moderately low | Intermediate risk* | Country risk | Investment performance risk | ||||||||||
| Jamaica | High | Moderately high | High risk | Investment performance risk | Country risk | Government and regulatory policy risks | ||||||||
| Low | Moderately low | Intermediate risk | Exposure to high risk assets | Investment performance risk | Intense competitive environment | |||||||||
| High | Moderately low | Moderately high risk* | Investment performance risk | Forex impact | Country risk | |||||||||
| Low | Moderately high | Intermediate risk | Investment performance risk | Weak technical results | Intense competitive environment | |||||||||
| Malaysia | Intermediate | Low | Intermediate risk | Investment performance risk | Muted market growth prospects | Government and regulatory policy risks | ||||||||
| Moderately high | Low | Intermediate risk | Muted market growth prospects | Investment performance risk | Country risk | |||||||||
| Very low | Moderately high | Intermediate risk | Investment performance risk | Exposure to high risk assets | Muted market growth prospects | |||||||||
| Low | Low | Low risk | Muted market growth prospects | Government and regulatory policy risks | Intense competitive environment | |||||||||
| Very low | Moderately high | Intermediate risk | Investment performance risk | Exposure to high risk assets | Country risk | |||||||||
| Oman | Moderately high | Moderately low | Moderately high risk | Country risk | Investment performance risk | Muted market growth prospects | ||||||||
| Poland | Moderately high | Moderately high | Moderately high risk | Country risk | Litigious legal system | Muted market growth prospects | ||||||||
| Portugal | Intermediate | Moderately high | Moderately high risk | Weak technical results | Investment performance risk | Intense competitive environment | ||||||||
| Singapore | Very low | Low | Low risk | Investment performance risk | Weak technical results | Muted market growth prospects | ||||||||
| Intermediate | Moderately low | Intermediate risk | Country risk | Muted market growth prospects | Investment performance risk | |||||||||
| Moderately high | Moderately low | Moderately high risk | Muted market growth prospects | Country risk | Investment performance risk | |||||||||
| Intermediate | Moderately low | Intermediate risk | Other | Country risk | Investment performance risk | |||||||||
| Very low | Moderately high | Intermediate risk | Investment performance risk | Exposure to high risk assets | ||||||||||
| Switzerland | Very low | Moderately low | Low risk | Forex impact | Investment performance risk | |||||||||
| Intermediate | Moderately high | Moderately high risk | Investment performance risk | Forex impact | Muted market growth prospects | |||||||||
| Thailand | Moderately high | Moderately low | Intermediate risk* | Investment performance risk | Weak technical results | Muted market growth prospects | ||||||||
| Low | Moderately low | Low risk* | Investment performance risk | Intense competitive environment | Country risk | |||||||||
| Very low | Moderately low | Low risk | Investment performance risk | Weak technical results | Country risk | |||||||||
| Uruguay | Moderately high | Moderately low | Moderately high risk | Country risk | Muted market growth prospects | Investment performance risk | ||||||||
| *Indicates those where the IICRA is one category lower than the IICRA indicated in table 5 in Insurers Rating Methodology. | ||||||||||||||
Table 3
| Health Insurance Industry and Country Risk Assessments On Nov. 17, 2020 | ||||||
|---|---|---|---|---|---|---|
| Country Risk | Industry Risk | IICRA | Top Risk 1 | Top Risk 2 | Top Risk 3 | |
| Australia | Very low | Moderately low | Low risk | Government and regulatory policy risks | Muted market growth prospects | Weak technical results |
| Brazil | Moderately high | Moderately high | Moderately high risk | Weak technical results | Muted market growth prospects | Country risk |
| Very low | Moderately high | Intermediate risk | Country risk | Investment performance risk | Investment performance risk | |
| Very low | Moderately high | Intermediate risk | Weak technical results | Country risk | Exposure to high risk assets | |
| Low | Moderately high | Intermediate risk | Muted market growth prospects | Weak technical results | Intense competitive environment | |
| South Africa | Moderately high | Moderately high | Moderately high risk | Muted market growth prospects | Country risk | Forex impact |
| U.S. | Very low | Moderately low | Low risk | Weak technical results | Government and regulatory policy risks | Intense competitive environment |
Table 4
| Global Sectors Industry And Country Risk Assessments On Nov. 17, 2020 | ||||||
|---|---|---|---|---|---|---|
| Country risk | Industry Risk | IICRA | Top Risk 1 | Top Risk 2 | Top Risk 3 | |
| Global Reinsurance Life | Low | Low | Low risk | Weak technical results | Investment performance risk | Government and regulatory policy risks |
| Low | Moderately high | Intermediate risk | Weak technical results | Intense competitive environment | ||
| Global Reinsurance Property/Casualty | Low | Moderately high | Intermediate risk | Litigious legal system | Investment performance risk | Weak technical results |
| Global Trade Credit | Low | Moderately low | Intermediate risk | Weak technical results | Other | Muted market growth prospects |
Table 5
| Other Sectors Industry And Country Risk Assessments On Nov. 17, 2020 | ||||||
|---|---|---|---|---|---|---|
| Country Risk | Industry Risk | IICRA | Top Risk 1 | Top Risk 2 | Top Risk 3 | |
| Very low | Moderately high | Intermediate | Weak technical results | Muted market growth prospects | Other | |
| Canada Mortgage Insurance | Very low | Moderately high | Intermediate | Country risk | Muted market growth prospects | Other |
| U.S. Mortgage Insurance | Very low | Moderately high | Intermediate risk | Country risk | Other | Muted market growth prospects |
| Very low | Low | Low risk | Country risk | Muted market growth prospects | Investment performance risk | |
| Very low | Moderately low | Low risk | Weak technical results | Muted market growth prospects | Investment performance risk | |
Related Criteria
- Insurers Rating Methodology, July 1, 2019
- Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
Related Research
- Global Credit Conditions: The K-Shaped Recovery, Oct. 6, 2020
- Country Risk Assessments Update: May 2020, May 11, 2020
This report does not constitute a rating action.
| Primary Credit Analysts: | Ali Karakuyu, London + 44 20 7176 7301; ali.karakuyu@spglobal.com |
| Mario Chakar, London (44) 20-7176-7070; mario.chakar@spglobal.com |
|
| Research Contributor: | Kai B Mirza, London + 44 20 7176 3980; kai.mirza@spglobal.com |
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