FSA assembles insurance task force
The Financial Services Authority (FSA) is reported to be bringing together a team of independent advisers who can respond to potential crises in the insurance sector, as turbulent markets and a slide in the values of investment portfolios threaten capital positions.
According to The Times, the regulator is also working with the Government to look at ways in which accounting rules can be adapted to avert the need for the large-scale fundraising seen in the banking sector during the summer.
The UK insurance industry has been applauded for its resilience during the credit crisis, however, last week shares in Prudential and Aviva plummeted on rumours that the FSA was investigating methods of easing capital requirement.
Both companies may have to take significant writedowns as a result of market volatility and have also invested heavily in the corporate bond market, where defaults are rising.
The FSA is known to be keen to avoid a situation where insurance companies are forced to sell shares and other assets in a falling market, creating long-term damage to the funds they manage.
Yesterday, Aviva sought to reassure investors about its capital position as the group reported a 12% rise in life and pension sales during the nine months to the end of September.
Aviva said its capital cushion now stands at £1.3 billion, although this is down £600 million from the end of September.
Category: Financial Services Authority News, Insurance News
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