Market volatility after Brexit would hit L&G, Standard Life-Moody's

LONDON, May 12 (Reuters) - Legal & General (LSE: LGEN.L - news) and Standard Life (LSE: SL.L - news) are among insurers most exposed to market volatility if there is a vote for Britain to leave the European Union and their solvency levels could suffer, ratings agency Moody's said on Thursday.

"We expect to see volatility in financial markets if the UK votes to leave the EU, which would weigh on insurers' capitalisation," Moody's said in a report.

The Bank of England is expected later on Thursday to acknowledge the potential for a shock to markets if there is a vote for Brexit in a June 23 referendum.

Life insurers are more sensitive to market moves than non-life insurers, and those with a strong domestic focus are most exposed to UK financial markets, Moody's said.

Legal & General's solvency ratio would drop to 158 percent if there is a fall in interest rates after a Brexit vote, from 169 percent reported at end-December, Moody's estimated.

A ratio above 100 percent shows that an insurer is well-capitalised, according to new European capital rules, but analysts want to see higher levels of capital for life insurers, because of their long-term liabilities.

Standard Life, Scottish Widows and Royal London are also heavily exposed to UK markets, Moody's said.

Ratings agency Fitch has also highlighted the Brexit vote as a key uncertainty for UK life insurers.

(Reporting by Carolyn Cohn. Editing by Jane Merriman)