Solvency II more critical than credit crisis

Europe

Solvency II is likely to force more than 25% of Europe’s insurers to make major changes to their operating structures, according to the latest report by rating agency Standard and Poor’s. These could include reducing the scale of operations, reducing risk, raising more capital, employing more risk mitigation measures, merging with other insurers or closing their doors to new business. S&P believe that Solvency II will significantly accelerate consolidation in the European insurance industry and in that respect will be much more significant for the industry than the fall out from the current sub-prime crisis. Simon Marshall, an S&P credit analyst, noted that European insurers have disclosed $7.0bn in mark-to-market losses associated with sub-prime losses, but said that the broader disruption in the capital markets has had a relatively minor impact.