UPDATE 1-European insurers face little hit from AIG-watchdog
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FRANKFURT, Sept 18 (Reuters) - European insurers likely face only limited fallout from recent financial turmoil following the rescue of troubled U.S. insurer American International Group (AIG.N), the region's regulators said on Thursday.
"We have been continuously analysing the situation since the middle of 2007. The immediate effect on the European insurance sector is limited," said Thomas Steffen, chairman of the group of European insurance supervisors known as CEIOPS.
Insurance regulators meeting in Brussels on Wednesday agreed that they must continue to closely monitor developments but said the AIG case was fundamentally different from the European insurance model.
"The main problems at AIG stemmed from its bond insurance business, which was used to guarantee complex structured products," Steffen said.
"Such products should be kept on a short leash and need intense supervision. However, in the EU they play only a minor role," he added.
The collapse of investment bank Lehman Brothers LEH.N and the $85 billion U.S. government bailout of the world's biggest insurer, AIG, this week have knocked financial stocks worldwide and prompted central banks to pump billions into strained money markets.
In addition to his European duties as chairman of CEIOPS, which advises the European Commission on insurance regulation, Steffen is also in charge of insurance supervision at German financial watchdog BaFin.
Earlier on Thursday, BaFin said it had surveyed insurers in Europe's biggest insurance market and determined that their stability was not in danger following the turmoil unleashed by the troubles at Lehman Brothers and AIG.
Germany is home to both Europe's biggest insurer, Allianz (ALVG.DE), and the world's biggest reinsurance company, Munich Re (MUVGn.DE).
The decline in world stock markets this year has hit insurers in Germany and elsewhere, prompting writedowns on their investment holdings, with industry observers predicting further writedowns will be needed in the coming months. (Reporting by Jonathan Gould; Editing by David Cowell)
