Fitch has affirmed Standard Life’s insurer financial strength (IFS) rating at ‘A’ and their long term issuer default fating at ‘A-‘. Both ratings are stable. Fitch also affirmed the companies subordinate debt at ‘BBB’.
The rating affirmations reflect Standard Life’s strong and resilient capitalisation. Standard Life’s ‘capital-lite’ product mix with low levels of investment guarantees reduce its sensitivity to financial market volatility compared to other UK life insurers. Standard Life is one of the leading players in the UK life and pensions market, a position achieved through continued success in the self-invested personal pensions markets.
Standard Life’s earnings power is dependent on the value of its assets under management, leaving the company exposed to falls in financial markets and increases in policyholder surrender rates. Managing its cost base and retaining customers is crucial to the insurers profitability. However despite adverse market conditions, Standard Life has managed to maintain strong net inflows over the past year.
The main driver of Standard Life’s ratings is its ability to maintain its position and profitability in its key UK pensions market in the face of increasing competition.
The key rating triggers that could result in an upgrade include greater product diversification beyond the UK pensions market or enhanced profitability within it, as indicated by operating return on assets or improved profit margins.
The key rating triggers that could result in a downgrade include a failure to maintain its position and profitability within the UK pensions market.
