EU re/insurances can withstand stock market volatility: AM Best

European re/insurers are well-positioned to withstand the current volatility in the stock markets, according to a new report by AM Best.

The rating agency said in the report, European Insurers and Reinsurers Withstand Stock Market Volatility but Investment Options Limited,that European re/insurers have made significant changes to their investment portfolios since the global financial crisis of 2008, and the subsequent European sovereign debt crisis in late 2011 to 2012.

The firm also said in the report that the majority of the large European re/insurers are currently extremely well capitalised, with a buffer of 20-30 percent in their investment portfolios to withstand market value fluctuations, without causing negative pressure on their current ratings.

However, the firm reported that companies are still “conservative” when it comes to their investment portfolios and investment opportunities may be limited.

“Investment portfolios are still largely concentrated on fixed income instruments. Companies are conservative in their approaches and maintain a strict policy of cash and extremely liquid assets to enable credit facilities to be available,” said AM Best.

Some companies have recently begun to search for yield and have shifted into real assets, due to the low interest rate environment, according to the report.