Financial sector’s profits will be hit

THE exposure of Irish banks to the life insurance sector and the adoption of new accounting guidelines will hit the profits of the financial sector in the coming years.

Moody’s, the credit ratings agency, said given the volatility of stock markets, which impacts on insurance firms, the sector will have to face ups and downs in profitability.

Moody’s said it will be a challenge for institutions that need to “manage the earnings accruing from their respective life insurance operations, given the impact of volatility in global equity markets on embedded values and asset management fees”.