Europe's 30 biggest insurers are girding themselves for a raft of stress tests in the coming weeks by European regulators to check the industry's ability to resist a market downturn. National European insurance supervisors are convening in Berlin on Thursday and Friday to set down precise recession, inflation and policy-surrender scenarios to test the impact on insurers' bond, share, real estate or liquidity positions.
The CEIOPS group of European supervisors originally planned to run the tests in 2010 but the EU's powerful Economic and Financial Committee, representing the region's governments, asked that the exercise be brought forward. The European Central Bank warned earlier this year that euro-area insurance companies may face 'significant' balance sheet stress due to financial market turbulence and a weak economy.
'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.
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