BRUSSELS Jan 28 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
"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)