The Financial Services Authority (FSA) has hit back at claims made by rating agency Fitch on Wednesday that it has placed 200 UK insurers in a "higher risk" category.
According to reports in The Financial Times today, the FSA said Fitch was "plain wrong" to claim that the principal City regulator regarded 200 UK insurers as being at "higher risk".
FSA managing director John Tiner said: "It is vital to understand that the approach we will be taking makes a clear distinction between the probability of a risk arising and the potential impact were it to materialise."
He clarified that the FSA had placed 200 insurers under the category of "high impact" but said it would not be unusual for these companies to pose a low actual risk since the probability of problems arising was assessed as being low.
The FSA also noted that the insurance sector had not been singled out specifically, but that it was carrying out risk assessments for all large companies it regulated.
Fitch defended itself yesterday: "We do appreciate the distinction being made between 'high impact' and 'high risk', but undoubtedly some of the 200 companies that FSA has classified as high impact will also be found to be high risk."
Fitch expressed its views on Wednesday in a report called `Solvency Abuse?: The Changing Face of UK Capital Requirements'.
