OREANDA-NEWS. Fitch Ratings has published a dashboard on the UK life insurance sector, summarising the outlook for the sector.

The rating outlook is stable, indicating that most ratings are likely to be affirmed in the next one to two years. This is despite threats to profitability from a number of government initiatives on pensions and increased regulatory scrutiny into how insurers treat their customers.

Major UK life insurers appear on track to report strong Solvency II capital after announcing substantial interim dividend increases. This capital strength reflects insurers' high-quality bond portfolios, duration-matching of fixed liabilities and limited exposure to unhedged equity risk.

As announced in the 2014 UK Budget, customers will no longer have to buy an annuity with their pension pots. Fitch expects the GBP12bn-a-year annuity market to shrink by at least a third as many savers will access their pensions as cash or via drawdown products instead. However, most major insurers will be able to absorb the negative effects because they have diverse businesses and strong capital positions - important factors underpinning their credit ratings.

The dashboard shows how sales of annuities have fared, gives an update on insurers' capital positions, and identifies some important developments to keep track of this year.