A.M. Best, one of the ICMIF Supporting Members, has performed additional stress tests of the balance sheets of insurers’ exposure to eurozone debt as economic conditions within the region continue to worsen. Findings of these evaluations are discussed in the recently published analytical briefing “A.M. Best’s Additional Stress Testing in Light of European Economic Uncertainty.” ICMIF members have access to the most recent report via the link below.
Initial results of the stress testing were performed using A.M. Best’s proprietary capital model, Best’s Capital Adequacy Ratio (BCAR) and were released in September 2011. The initial September report can be found on A.M. Best’s Supporting Member page on this web site.
Most insurers in the eurozone are currently showing good balance sheets, according to ratings undertaken by A.M. Best, but the ongoing market turbulence in the region and recessional pressures threaten to undermine this current strength. The financial crisis in the eurozone has worsened since A.M. Best’s report in September and there is still great division amongst leaders as to how to solve the current crisis. The worsening economic conditions could have a profound impact on the insurance sector and Head of the European Central Bank, Mario Draghi, has predicted that the eurozone is likely to enter a mild recession before the end of 2011.
A.M. Best will continue to monitor the performance of rated insurers in what is an already competitive market. A.M. Best conclude in the report that despite recent natural catastrophe losses and investment write-downs this year the industry for insurance does remain resilient and demonstrates sound levels of capital and good reported earnings.
Download the full report here (English) (pdf, 159.04 kB)