Regulators say insurers face risks from low investment gains
International regulators group CEIOPS has said in its second half financial stability report that low investment returns pose a threat to insurers because 2008 was the second worst claims year on record.
“2009 is especially challenging due to a prolonged period of deteriorating macroeconomic environment, “ it said.
“The insurance industry as a whole faces several risks and challenges going forward, of which the most prevalent are financial risks, in particular the risk of low or even again decreasing interest rates as well as risks related to depressed equity markets. A prolonged period of economic recession will be particularly challenging for the underwriting performance.
Reinsurance soft
“In 2008, the course of the softening global reinsurance market continued. Due to the financial turmoil the demand for reinsurance capacities is increasing. Lower or even negative investment results have placed pressure on primary insurance undertakings’ capital. In the European renewal season 2009 the prices increased in certain reinsurance segments.
“The monoline sector remains under significant stress and the deterioration in structured credit markets and, in particular, in securities related to US subprime mortgages, has continued. Capital levels have increased as business runs off the books, with little or no new business being written.
