Ruxley Ventures research shows increasing squeeze
(Re)insurers face inflated future bills for handling asbestos claims, according to a study by Ruxley Research.
The research said that US asbestos losses had risen to $10bn for US insurers, who needed to further increase their reserves, and that European insurers faced the uncertainty of further reserve hikes.
It added that, while the average US asbestos survival ratio of European (re)insurers remained healthy and consistent with previous years, the challenges facing US insurers could become a problem for their European counterparts, particularly reinsurers.
This uncertainty comes against a background of mounting pressure from investors and regulators for insurers to deliver ever-greater capital efficiency.
Ruxley Ventures chief executive John Winter said: “While it is heartening to see that the asbestos reserves of European insurers continue to be robust, the pressure from a rising asbestos ultimate and the costs associated with holding on to these liabilities are increasingly unattractive to investors.
“While uncertainty is rising, insurers have a window of opportunity, given Solvency II’s delay, to act now and look to transfer their existing US asbestos pollution and health liabilities.”