Best’s Journal: Mega-Catastrophe, Financial Meltdown Greatest ‘Grey Swan’ Threats in Europe

OLDWICK, N.J.--()--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.

To learn more about Best’s Journal, watch a brief video at www.ambest.com/sales/aboutbestsjournal.html. More information about the Best’s Insurance News & Analysis subscription service is available at www.ambest.com/sales/bina/default.asp. To order, contact Customer Service at (908) 439-2200, ext. 5742 or at (800) 424-2378 when calling from the U.S. and Canada.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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Contacts

A.M. Best
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com