NU Online News Service, Nov. 5, 11:46 a.m. – Standard & Poor’s, New York, says weak European life insurers may have trouble borrowing cash over the next few weeks to compensate for problems with their stock holdings.
Few European life insurers face many claims from the Sept. 11 attacks, but “a number” are suffering from the effects of the attacks on the prices of the stocks in their investment portfolios, according to a commentary by David Anthony, an S&P financial services ratings analyst in London.
Life insurers can borrow cash to beef up their capital levels by “selling” notes, bonds and other debt securities.
Anthony expects European life insurers with solvency concerns to sell subordinated debt, short-dated convertible debt, and other types of debt securities to improve their solvency ratios.
But the Sept. 11 attacks have scared some investors away from insurance debt, and plenty of insurers with strong ratings will be competing for the attention of the investors who are still in the market, Anthony says.
Given the high levels of investor caution and uncertainty, and the large amount of debt coming to market, “the ability for some lower-rated issuances to achieve acceptable terms remains uncertain,” Anthony warns.