Ageas could stop long-term life sales under Solvency II
BRUSSELS Jan 28 (Reuters) - Belgian insurer Ageas may stop selling some long-term guaranteed life assurance products if draft capital rules for the insurance sector take effect in their current form.
"Of course what I am saying here is very extreme. But, as it is today, it is a potential consequence of Solvency II," group risk officer Emmanuel Van Grimbergen told reporters on Tuesday during a seminar on Solvency II.
Solvency II is aimed at making insurers hold capital in strict proportion to risks they underwrite, and is expected to lead to higher capital requirements for much of the sector.
The new rules, scheduled to take effect in January 2014, will unlikely be introduced until 2016 at the earliest because of disagreement over the final shape of the rules.
Ageas, which has been trying to reduce its dependence on life assurance, still generates about 70 percent of insurance inflows from life products, including long-term savings policies or pension products.
The current Solvency II proposals oblige insurers to revalue assets they hold to generate income for their customers to the market rate, exposing them to fluctuations in the case of long-term savings products.
However, that is not necessary, Ageas says, as often policyholders have agreed to pay the market rate anyway if they cash in, meaning Ageas itself is not exposed to the changing price.
"The problem is that today Solvency II does not allow to take this into account, or only to a very limited extent," said Van Grimbergen. The effect on policies that last for long periods could be to make them expensive.
"It could even go to the extent that we say as an insurance company, and I am a little bit provocative here of course, that we stop to write this type of business because we would come to the conclusion that we cannot afford to have this type of volatility on our books," he said. (Reporting By Ben Deighton; Editing by Dan Lalor)
- Moscow fights back after sanctions; battle rages near Ukraine crash site
- Carnage at U.N. school as Israel pounds Gaza Strip |
- U.S. economy bounces back in second quarter |
- EU and U.S. announce new sanctions on Russia over Ukraine |
- Obama says strains over Ukraine not leading to new Cold War with Russia