The agency downgraded Friends in January and it remains on negative outlook.
Fitch senior director of insurance David Prowse says: “The problem is cashflow-based as the business on its books is not generating profit fast enough to support the writing of new business it wants to see.”
Fitch will look at how successfully Friends switches off business areas with high up-front costs and whether this has an impact on other areas of business. Prowse expects protection business to be down across the sector so he will be watching for erosion of market share.
Prowse also raises concerns over the long-term prospects for Standard Life as it has taken a big slice of the Sipp market.
He says: “This could be a one-off win as the money has come in and it may slow down. How Standard will look in the long term remains to be seen.”
Friends declined to comment on cashflow until its interim results and Standard says it remains the fastest-growing provider in the Sipp market, with a diverse business model.