...Capital, Earnings Support Sector: Fitch Ratings expects to affirm most of its ratings for Australian and New Zealand insurers in the next 12-24 months, supported by the strength of their capitalisation and robust earnings. Key factors that could lead to a deterioration of the sector's credit profile would be a severe economic downturn, and persistent and large natural catastrophe losses. Solid Capital Ratios: Regulatory capital coverage ratios fell in 2015. However, a strong classification of capital levels is consistent with the results of Fitch's internal assessment of Australian and New Zealand insurers' capital adequacy ratios. As a result of the Australian Prudential Regulation Authority's (APRA) rigorous risk-based capital regime, Fitch can apply a regulatory override and assign 100% equity credit to these instruments in its assessment of capital adequacy. Low-Risk Investment Portfolios: Conservative investment portfolios are dominated by highly rated fixed-income securities, giving...
