2010 won’t be a very good year for U.S. P&C insurers, as evidenced by
The outlook for insurers is uncertain, as a prolonged period of rock-bottom rates weighs on investment returns, while a potential acceleration of the swine flu pandemic poses an additional threat, CEIOPS says. "The insurance industry as a whole faces several risks and challenges going forward, of which the most prevalent are financial risks," it says.
The European Central Bank has cut rates by 4 percentage points to a record low of 1% since the onset of the global financial crisis in October 2008, and forecasters expect it to raise borrowing costs only to 1.5% by the end of next year, according to a Reuters poll.
While the H1N1 flu outbreak is likely on current evidence to have only a "minor" impact on the insurers through claims on health insurance and business disruption policies, CEIOPS says uncertainties remained regarding the future course of disease.
CEIOPS adds that while a recovery in stock and bond markets from last year's crisis has shored up European insurers' finances this year, their own collective market value is still 70% down compared with mid-2007.
