Despite the recent spate of companies being downgraded by ratings agencies, life offices are holding...
Despite the recent spate of companies being downgraded by ratings agencies, life offices are holding assets capable of withstanding further falls in equity markets, according to the Financial Services Authority (FSA).
As part of the reform of calculating and reporting capital adequacy, the FSA asked the largest life assurers to assess their liabilities.
John Tiner, a managing director at the FSA, said: 'In practice, firms need to hold assets well in excess of these best estimate liabilities in order both to absorb unexpected losses and liabilities and to support future new business. This survey confirms the insurance industry does indeed hold such excess assets.'
Commenting on the FSA's response, Mary Francis, director general of the Association of British Insurers, said: 'We are pleased that the FSA has confirmed its confidence in the strength of life offices. This is a welcome statement, particularly in the context of current market conditions. '
