The ratings of most UK life insurance companies were placed under review for possible downgrade by Moody’s today. The rating reviews were initiated primarily because of the impact of the depressed equity markets on the companies’ capital strength and financial flexibility, says Moody’s. The reviews will take up to three months to complete.

UK life companies that are part of larger and stable banks were not placed the ratings under review, but Moody’s will continue to monitor their financial strength in the current harsh environment in the context of their parent companies’ financial performance and continued implicit or explicit support for them.

Moody’s will release a Special Comment report sometime during the next two weeks providing further discussion on how it views the weakening of the sector.

Moody’s rating actions follow on from its comprehensive review of the UK life insurance sector in August 2002. At that time, Moody’s commented that it was beginning to change some outlooks and gave a clear indication that a continued or sustained fall in equity markets would likely lead to more review activity and possible rating changes.