UK life insurers' exposure to Thames Water is 'minimal', Citi says
By Alexander Bueso
Date: Friday 30 Jun 2023
(Sharecast News) - Analysts at Citi pointed out on Thursday that the UK life insurance sector's direct exposure to Thames Water was "minimal".
They estimated that it was in a range of 0.2-0.3% of Aviva, L&G and Phoenix Holdings's annuity portfolios and less than 0.5% M&G's.
Furthermore, most of that debt was held at the opco level.
"Zooming out, Utilities represent c.10%-20% of corporate bond portfolios and there could be some downward pressure from ratings migration here (especially from other water companies) but overall we note that UK life insurers have a strong track record of managing credit risk.
"While the fundamental impact appears manageable this is another potential area of investor concern for what is a credit geare subsector."
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