European Central Bank Warns of Risks to Insurers of Low Interest Rates
Monday, 06 01 2015, Category: Insurance and Reinsurance, Country: Europe
The European Central Bank said on Thursday that record low interest rates were putting insurance firms and banks under increasing pressure and warned that any sell-off in stocks and bonds could damage the euro zone’s recovery.
In its twice-yearly Financial Stability Review, the ECB also said risks from Greece for the euro zone’s governments had “increased sharply” but that their borrowing costs and growth prospects were being helped by measures like the ECB’s bond-buying program.
The negative side-effect of that though was the squeeze it was putting on insurance firms who are finding it increasingly difficult to find assets that pay out enough to cover their costs, and for banks in terms of their profitability.
The ECB’s message echoes similar warnings from the International Monetary Fund and one of Europe’s top regulators earlier this month.
Source: Insurance Journal