2nd June 2019
S&P Global Ratings has published: "Solvency II Gives European Insurers Room To Issue More Hybrid Debt, But Not Without Risk To The Ratings".
Some of the key takeaways from the article are:
-Most of our rated European insurers could raise further hybrid capital if they needed to, as 60% of their Solvency II total eligible hybrid capacity is unused, on average.
-However, most of our rated insurers might not be willing to use their full Solvency II hybrid capacity, even under stress, because the credit S&P Global give for hybrid capacity is on average 25% lower than under Solvency II, and could prove to be an additional constraint.
-Additional hybrids can benefit insurers' capital adequacy, but under stress, increased use of hybrids might weaken insurers' financial leverage and capital quality, and thereby weaken the rating agency's of their creditworthiness.
-S&P Global expect new hybrid issuance to grow modestly and in line with the call dates on existing debt in the coming years, as its rated insurers' Solvency II ratios are generally within their target ranges.
S&P Global Trends(497 articles)
Solvency II Trends(1,632 mentions in Insurance Newslink)