Low reinsurance rates will speed up mergers and acqusitions
The reinsurance industry could face a wave of mergers and acquisitions next year because of low rates, CEIOPS says.
The European insurance regulator also predicts that primary insurers will face a continued challenge to get underwriting up to scratch because of the threat of low yields on investment returns.
But CEIOPS, speaking in its second bi-annual 2010 Financial Stability Report, says that most insurers have enough of a solvency margin to absorb shocks.
Addressing pensions, the report says: “The pension sector has been less affected by the financial turmoil given the long-term nature of liabilities.
"For Defined Benefit schemes capital/contributions from sponsors had to be increased in some countries, whereas in others funding conditions were strengthened.
"Coverage ratios were not directly affected, where fixed discount rates are used. For Defined Contribution schemes the impact of the financial turmoil was greatest for members approaching retirement or for schemes heavily invested in equities.”
