Italian insurers see average reduction of 7% in asset values

Written by Adam Cadle

29/05/2020

Italian insurance companies saw an average reduction in their asset values of 7% in Q1 2020 due to a decline in stock prices and the widening of credit spreads on debt securities, according to the Institute for Insurance Supervision, IVASS.

The sharp decline in the prices of financial assets and the increase in their volatility triggered by COVID-19 meant that the average solvency index of the Italian insurance sector fell 35 percentage points in the Q1 2020 to around 200%, although it still remained well above the regulatory minimum of 100%.

The volatility of financial markets and the widespread increase in risk premiums demanded by investors, meant stock prices of major Italian insurers fell in Q1 by 29%. The falls are in line with those of the other euro area companies.

For Italian companies, investments in private bonds account for about a fifth of the portfolios, of which almost half have a BBB-class rating.

IVASS, in view of uncertainty over the future evolution of the risk factors to which firms in the insurance sector are exposed, sent a letter to Italian companies asking to adopt, at an individual and group level, extreme prudence in the distribution of dividends.

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