Volatility from Brexit to affect insurers’ finances

July 4 2016 by InsuranceAsia News Staff

Prolonged stock market volatility due to Brexit may eventually strain the capital adequacy ratios (CAR) or the financial strength of insurers.

Singaporean experts believe that such volatility would lower an insurer’s CAR, especially those holding substantial equities.

According to Philip Chung, an insurance analyst from S&P, life insurers generally are exposed to more risks than their non-life counterparts but since most of their investments are in the Asia-Pacific, then Brexit’s impact may not be as damaging.

Chung said it is important to consider how big or small the business is.

A business with high net worth usually gets backing from other sources like US investments and bonds.

Among nine major life players, Aviva Singapore had the highest CAR at 267% based on regulatory filings last year, followed by NTUC Income and Prudential Singapore both with 228%.

HSBC Insurance had the lowest CAR at 204%.

The average CAR of the nine major life insurers in Singapore last year stood at 229%.

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