European insurance news &views:Takeaways from Italian regulator /UK regulator stands firm on UK solvency rules
Focus headlines: Italian regulator conference call / UKItaly: We hosted a call with Alberto Corinti, board member of IVASS, the ItalianInsurance regulator. | UK: FT reports UK insurers reap about ￡60bn in adjustmentwaivers related to EU rules as stated by UK regulator.
UBS comment on focus headlineIVASS call: takeaway's include: 1) New solvency disclosures on 20th May are a concernfor both the regulator and companies and the regulator does not just look at statedSolvency ratios but ratios ex-transitionals, volatility adjusters and quality of capital – inlinewith our thesis; 2) Limited scope for significantly changing risk profile (e.g.
leveraging up) on M&A or gaining significant diversification benefits if a bank andinsurer merge; and 3) No immediate regulatory threat for changes to pricing orcharging structures in Italy. | UK: Sam Woods stated UK insurers have benefited from￡60bn in capital benefits versus total capital of ￡126bn across the sector. He indicatedthat Solvency II is working well and sensible in its current form. We note this highlightsthe extent of disconnect between industry commentary versus PRA's positon – thelatter being consistent with our research.
Other news headlines / UBS researchEurope: Research: 4Q16: ASR, SCOR, News: SCOR ready to leverage “positiveprospects” in reinsurance, Interest rates cause sharp increase in longevity reinsurance:Bank of England, Modernisation, Brexit are top priorities for Lloyd’s Market Association(LMA), Former RSA executives fined over accounting scandal | Americas: Transatlanticreinsurance deal to create a “level playing field”, Ironshore increases Terrorism &Sabotage programs capacity to $400m | Global: Premium volumes stagnant as globaltrade levels shrink: Munich Re.
Price performanceEuropean insurers were up 0.2%. Sub-sector outperformers were: Euro multi-line(0.5%), Reinsurance (0.4%) and Benelux (0.2%); underperformers were: Switzerland(0.0%), UK Non-Life (-0.3%) and Nordics (-0.4%). Amongst individual stocks,outperformers were: Scor SE (3.2%), ASR (3.0%) and AXA (1.5%); underperformerswere: Lancashire (-1.1%), Vienna (-1.4%) and Uniqa (-2.6%).