Life Rating Analysts Start to Think About Ukraine

What You Need to Know

Life and annuity issuers did well in terms of sales and profitability in Q4 and in all of 2021.
The attack could affect U.S. insurers by hitting the world economy, which would affect everybody, Iten said.
U.S. companies have little exposure to Eastern European insurance business or investments, according to NAIC data.

Rating analysts are starting to wrestle with ideas about what Russia’s invasion of Ukraine might mean for U.S. life and annuity issuers.

Russia launched a broad land, sea and aerial attack on Ukraine around 10 p.m. Eastern time Wednesday (5 a.m. Thursday in Kyiv, Ukraine’s capital).

Anika Getubig, an associate director with S&P Global Ratings, talked about the invasion briefly Thursday in a web briefing the rating agency held to go over insurance sector performance in the fourth quarter of 2021.

“That has caused a lot of market turmoil,” Getubig said.

She noted that that she has been asking many life and annuity issuers about the implications of a Russian war with Ukraine this week.

At that point, “they were not yet seeing an impact through investments,” Getubig said.

Now that the war has started, “it’s really just too early to tell,” Getubig said. “Right now, we’re not seeing a lot of that impact going through. It’s certainly something to pay close attention to as this unfolds.”

What It Matters

How S&P analysts see the world and insurers has a big, direct on insurers’ finances, because S&P’s ratings affect whether insurers, and countries such as Russia, can borrow money, and how much they have to pay when they take out ordinary loans or issue bonds.

The Backdrop

The Russian attack occurred at what, for U.S. life insurers, has been a time of optimism.

Life and annuity issuers did well, both in terms of sales and profitability, in the fourth quarter of 2021, and in all of 2021, despite the effects of the COVID-19 pandemic on mortality and morbidity, Getubig said.

“We do think the life insurance industry has demonstrated resiliency through a challenging period,” she said.

Getubig sees insurers’ sales of registered index-linked annuities and variable universal life as especially strong.

One sign of the big, publicly traded life insurers’ strength and optimism is that their spending on buying back their own shares of stock increased above 2019 levels.