Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • March 2012
03

Solvency rebound 'not due to balance sheet change'

Open-access content Thursday 22nd March 2012 — updated 5.13pm, Wednesday 29th April 2020

A recent improvement in the solvency ratios of European insurers is largely down to recovery in sovereign bond markets rather than an underlying improvement in their balance sheets, Fitch said today.

2

Insurers reporting results over the last few weeks have generally noted a significant strengthening in their solvency ratios since the decline in sovereign bond market rates in late 2011 sent ratios lower across the board.

But, the ratings agency said that insurers targeting high investment-grade ratings may need to improve the quality of the capital they hold to reduce volatility in their solvency rations.

Fitch believes volatile ratios are 'not in keeping' with the highest ratings because they indicate the insurer's limited ability to shield itself from significant market moves.

It highlighted the experiences of insurers with big operations in Italy, Spain and other countries where sovereign spreads widened in 2011.

These have tended to see the most volatility in solvency ratios, it said, 'because the desire to match assets and liabilities led to them holding large portfolios of these sovereigns' bonds.

'Differences in the implementation of Solvency I rules between different countries within the EU can make comparisons difficult and may also have added to volatility in the ratios,' it added.

Rules for calculating the solvency ratio in Italy are 'more prudent' than in France and Germany - something Fitch said means ratios are generally lower. This means, in a market downturn, restrictions on assets that can be counted towards capital come into effect earlier, which results in a sharper drop in the solvency ratio. 'Conversely, as markets recover, rations may also rebound faster,' Fitch noted.

This article appeared in our March 2012 issue of The Actuary.
Click here to view this issue
Filed in:
03
Topics:
General Insurance

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2022 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ