S&P puts insurers on negative watch

IRISH PUBLIC Bodies Mutual Insurance, the body that insures State bodies and local authorities, including the HSE, may have its credit rating downgraded by Standard and Poor’s.

The ratings agency has put the ratings of 15 European firms, including top insurers Aviva and Alliance, on negative watch due to the euro zone debt crisis. The move was linked to the agency’s warning last week that it may downgrade 15 euro zone countries’ sovereign debt, it said.

RSA Insurance Ireland was also named by the ratings agency.

Irish Public Bodies insures most local authorities and county councils and is owned by its members. It currently has a triple-B rating with Standard and Poor’s.

Accounts filed for the insurer show that it posted a pre-tax profit of €71 million in 2010, down from €84 million the previous year. Net earned premiums dropped by 25 per cent to €77 million from €102 million the previous year. Claims of €87.4 million were paid during the year, down from €89.9 million in 2009. Assets available for solvency cover were 19 times the minimum requirement.

The body, which underwrites insurance for local authorities, educational institutions and the HSE, recently signalled that it was to pay a dividend to its members.

The accounts show the body participated in the recent quantitative impact study by European regulatory supervisors and will “comfortably exceed” expected capital requirements under the EU Solvency II directive.

Standard and Poor’s decision to place some of the world’s top insurance companies on negative watch is the latest in a series of moves made by rating agencies over the last number of months. Less than two weeks ago Standard and Poor’s downgraded some of the world’s largest institutions.

The agency lowered by one notch its long-term credit ratings on some of the biggest and best-known banks in the United States, including Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase.

Moody’s cut the ratings of three French banks last week.