On 8 April Callum MCarthy, Chief Executive of the FSA, addressed the FSA’s annual Insurance Sector Conference on aspects of the wider financial context of the insurance industry.
He outlined the immediate issues arising from the turbulence in financial markets for traditional insurers. The FSA’s investigations had revealed that most insurers had little direct exposure to sub-prime. However, it was clear that some firms would have seen falls in the value of equity, bond and property portfolios, rating downgrades on some investments and lower returns on investments. The FSA would be seeking to identify vulnerable or outlier firms and encouraging firms to further develop their stress and scenario testing. Whilst recent events did not seem to have had a significant impact on the liquidity of insurers, they were urged to keep this under review. He stressed the importance of correct valuation of assets for maintaining capital adequacy.
He also addressed longer-term issues for the industry posed by increasing life expectancy, and in particular the importance of correctly pricing the risks of different age and socio-economic groups, as they were expected to see differing improvements in life expectancy.
http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2008/0408_cm.shtml
He outlined the immediate issues arising from the turbulence in financial markets for traditional insurers. The FSA’s investigations had revealed that most insurers had little direct exposure to sub-prime. However, it was clear that some firms would have seen falls in the value of equity, bond and property portfolios, rating downgrades on some investments and lower returns on investments. The FSA would be seeking to identify vulnerable or outlier firms and encouraging firms to further develop their stress and scenario testing. Whilst recent events did not seem to have had a significant impact on the liquidity of insurers, they were urged to keep this under review. He stressed the importance of correct valuation of assets for maintaining capital adequacy.
He also addressed longer-term issues for the industry posed by increasing life expectancy, and in particular the importance of correctly pricing the risks of different age and socio-economic groups, as they were expected to see differing improvements in life expectancy.
http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2008/0408_cm.shtml
