European Central Bank worried about insurers’ investments
Euro area insurance companies may face balance sheet stress due to financial market turbulence and a weak economy, the European Central Bank has warned, Reuters reports.
"The slowdown in economic activity is weighing on the underwriting performance of euro area insurers and stresses in financial markets continue to pose challenges for the stability of insurers' investment income," the ECB said in its twice-yearly Financial Stability Review.
"Insurers are currently facing considerable risks that could, should they materialise, quickly reduce solvency positions significantly," the central bank said
The ECB recommended that insurers reduce large investment exposures through hedging and think again about continuing with share buyback programmes and dividend payouts.
"Insurers and insurance supervisors need to be vigilant in handling the risks facing the insurance sector and should take appropriate action to manage them," the ECB said.
"A greater transparency of investment exposures and the accounting methods used is also needed and should be promoted by insurance supervisors," it added.
The CEIOPS group of EU insurance watchdogs said insurers have helped stabilise a financial sector rocked by the crisis.
