UK FSA Eases Solvency Rules for Life Insurers
Feb 3, 2003
The Financial Services Authority (FSA) is considering grating waivers to individual companies from its statutory rules governing how they calculate their solvency. This is the fourth time it has weakened the regime in the last 17 months.
The FSA also admitted that a few companies had already indicated to the watchdog they were pressing against or had breached their so-called "regulatory minimum margin", which requires their assets to exceed their liabilities by at least 4 per cent. The regulator insisted these solvency margins were set very conservatively - and breaching them would not mean companies were close to commercial insolvency.
The regulator's action follows a week in which the FTSE 100 index briefly touch a seven-and-half-year low of 3,392 - prompting fears that life assurers had become forced sellers. The FSA's action was welcomed last night by the Association of British Insurers, which said the watchdog had introduced a welcome element of flexibility whilst preserving strong regulation.
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