LONDON Dec 3 Planned new capital rules for
European Union insurers have cut the value of European stocks by
nearly ten percent over the last three years, French insurer Axa
said on Monday.
The Solvency II regime has prompted insurers to sell about
250 billion euros ($326.79 billion) of equities because shares
attract a higher capital charge than bonds under the new rules,
according to a study by Axa's fund management arm.
This selling pressure is responsible for about a quarter of
the 33 percent fall in European stocks compared with Jan. 2007,
their peak prior to the 2008 banking crisis, Axa said.
Insurers have redeployed some of the cash into corporate
bonds, raising their price and contributing to a fall in their
The industry has also bought more government bonds, which
attract no capital charge under Solvency II even though the
eurozone debt crisis has cast doubt over the supposedly
risk-free status of sovereign notes.
Europe's insurers are expected to sell a total of 500
billion of shares in the eight years to 2017 as they adapt to
the new rules, with the industry's bigger players accounting for
most of the disposals so far, Axa said.
Solvency II is designed to make insurers hold capital
reserves in strict proportion to the risks they cover, and is
expected to usher in higher capital requirements for many.
The rules were originally intended to take effect in October
this year, but have been repeatedly delayed due to wrangling
between EU governments over how they should apply to life
They are now not expected to come into force until 2016 at
($1 = 0.7650 euros)
(Reporting by Myles Neligan; Editing by Louise Heavens)