24 June 2016 Insurance

Financial volatility could hit insurers’ half-year results, warns AM Best

The volatility triggered in the financial markets since the revelation that the UK will leave the EU could have a material impact on insurers’ half-year results and balance sheets, rating agency AM Best has claimed.

The rating agency said it does not expect to take rating actions in the near term as a direct consequence of the decision by UK voters to leave the EU, however.

“The implications for the financial strength of insurers with regard to subsequent investment market volatility, currency fluctuations and increased economic uncertainty will be closely monitored,” it said.

“Also, as the terms of the exit are negotiated, AM Best will discuss with rated companies what prospective changes will mean for their competitive positions and ability to continue to access business in the UK and the EU.”

The decision has led to a sharp drop in sterling and global equity markets, however, and AM Best said that the financial market volatility could have a material impact on insurers’ half-year results and balance sheets, with most companies reporting their positions as at 30 June 2016.

“Solvency II’s market-consistent approach to valuing the economic balance sheet means that financial market volatility will be closely reflected in European insurers’ reported solvency capital ratios. AM Best will discuss the implications of this with rated entities, but will continue to incorporate a prospective view when assessing insurers’ financial strength,” it said.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk