OLDWICK, N.J.--(BUSINESS WIRE)--A mega-catastrophe and financial system shock are two leading “grey swan” threats to European insures, according to the centerpiece report in the latest edition of Best’s Journal, a biweekly publication that presents A.M. Best’s original research, analysis and commentary on the global insurance industry. Many in the insurance industry believe that the so-called “black swan” event, which refers to a highly improbable loss scenario, should instead be considered in many cases as a “grey swan” event, as these occurrences have become likely enough that they should be recognized and managed. A.M. Best identifies these threats in a report titled, “The ‘Grey Swans’: Top 10 Threats to European Insurers’ Financial Strength,” and separates them into two categories: those that deliver a “knock-out punch,” such as a mega-catastrophe or extreme financial market downturn, versus those that lead to a “slow and painful death,” such as higher regulatory costs and protectionist practices, or emerging underwriting risks.
Other highlights in this issue of Best’s Journal include as follows:
- L/H Impairments Match Record Low; Accident & Health Remains Trouble Spot: One financial impairment of a U.S. life/health insurer was recorded in 2013, matching the low last seen in 1962. The impairment – an accident and health insurer like the two recorded in 2012 – remained consistent with recent trends for financially impaired companies in the L/H industry, according to a Best’s Special Report.
- Schedule BA Investments – Behind Their Rising Trend: This Best’s Special Report states that in recent years, the major U.S. insurance industry sectors have been increasing their allocations to Schedule BA investments – a “catch-all” schedule for nontraditional asset classes.
- Recent noteworthy Best’s Credit Rating Actions, rating rationales and more.
Best’s Journal is available exclusively as part of a subscription to the Best’s Insurance News & Analysis service, and is delivered every two weeks as a bound, printed publication and in digital format via the Best’s Insurance News & Analysis website. Each issue is an installment in a cumulative business resource that provides insight from A.M. Best’s perspective as a credit rating agency, data provider and news publisher with a unique focus on the insurance industry.
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