Fitch has downgraded a handful of UK life insurers on the back of the continuing impact of the coronavirus pandemic.

A note from the ratings agency yesterday says that two have been revised from positive to stable, and three have moved from stable to negative.

Phoenix and ReAssure have turned to stable, while Just, Legal & General and Scottish Widows have moved to negative.

The other five ratings in its sample were maintained – four stable and one negative.

Aviva, M&G, Pensions Insurance Corporation, and Rothesay Life are in the stable group, while Quilter maintained its negative outlook.

Fitch notes that capitalisation remained strong among the group, as did Solvency II coverage ratios and liquidity for the first quarter of 2020.

“We do not expect a significant impact on mortality claims as a result of the coronavirus deaths spike because mortality risk is largely reinsured,” Fitch’s analysts write.

“UK life insurers hold enough liquid assets to enable them to meet expected liquidity requirements including debt interest and maturities, dividends and collateral calls due to the robust liquidity risk management in place for most insurers.”

However, Fitch notes that fixed-charge coverage ratios did weaken in 2019 as a result of significant debt issuances by UK life insurers.

“As earnings reduced under our rating-case assumptions, fixed-charge coverage weakened further but remained above the downgrade sensitivity for most insurers,” Fitch notes.

The exception was Just, whose downgrade to negative reflects its fixed-charge coverage dropping below the agency’s downgrade threshold, as well as a view that its “debt service capability and financial flexibility are weaker than similarly rated peers”.