A.M.BestTV: European Insurers Ramp Up Capital Market Activity

OLDWICK, N.J.--(BUSINESS WIRE)-- In this “First Monday” episode, A.M. Best’s Managing Director of Analytics Stefan Holzberger speaks about how market conditions and the looming start of Solvency II have prompted European insurers to increasingly tap the capital markets. Click on http://www.ambest.com/v.asp?v=fmeurodebt715 to view the video program.

Remaining “First Monday’ episodes will focus on interviews conducted with Holzberger on how low interest rates are a “double-edged sword” for European insurers and Director of Analytics Catherine Thomas on how London’s standing as a key global insurance center would be diminished if the United Kingdom were to exit the European Union. “First Monday” is A.M. Best’s monthly program featuring commentary by the company's leading analysts.

European insurers looking to lower their cost of capital and optimize risk capitalization levels have increasingly looked toward capital markets. The actions taken by the European Central Bank have helped stabilize capital markets and allowed insurers to continue debt financing activity at reasonable rates. Holzberger discusses A.M. Best’s analysis of the debt issued by European insurers and its effect on the market. “From 2005-2006, there was a very tight clustering of debt issued by insurance companies; however, with the global financial crisis in 2007-2008, a freezing in the market occurred. Now, over the last two years roughly, A.M. Best has observed an increase in the amount of debt being issued into the capital markets (by European insurance groups) at back to the levels that it was during 2005-2006.”

Holzberger also addresses the issue of Solvency II. “The transition area arrangements under Solvency II will allow insurance companies to issue debt, which would qualify for capital credit under Solvency I. In addition, for a 10-year period, this hybrid insurance will qualify for regulatory capital credit under Solvency II through what is known as ‘grandfathering.’”

Based on the competitive environment, Holzberger also sees, “insurance companies right sizing their balance sheets, as they look for growth opportunities and return capital to shareholders.”

Recent episodes of A.M.BestTV include:

• London Market Competition Intensifies: Director of Analytics Catherine Thomas speaks about how traditional business models in the London market are threatened by changing market dynamics and economic uncertainty: http://www.ambest.com/v.asp?v=fmlondon715.
• U.S. State Funds Ride Market Momentum: Senior Financial Analyst W. Dolson Smith says increased payrolls, along with higher premium rates and more stringent underwriting, has led to a fourth consecutive year of growth, based on net premiums written, in the U.S. workers’ compensation residual market. Click on http://www.ambest.com/v.asp?v=fmstatefunds715.
• Insurers Explore New Paths to Asset Management: Insurers are searching for growth and better yields through new investment opportunities via asset managers, private placements and global venues: http://www.ambest.com/v.asp?v=asset615.
• Captive Proponents Push to Clarify Premium Tax Issue: Two senators recently reintroduced legislation that proposes to amend the Nonadmitted and Reinsurance Reform Act of 2010, which determines how surplus lines taxes are paid by nonadmitted insurers: http://www.ambest.com/v.asp?v=nrra615.

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150708006170/en/

A.M. Best
Lee McDonald
Group Vice President, Publication and News Services
(908) 439-2200, ext. 5561
[email protected]

Source: A.M. Best

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