Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

* European Insurers Leading Global Insurance Capital Preservation: The ebbing economic tide has significantly exposed the European financial system for what it always was - a low profit, weak capital generating, and highly geared sector which has been dangerously close to loss making for over a decade;* Solvency II Regime Not Capturing Risk:The Corona Crisis and monetary/fiscal response have created a perfect storm for insurers with negative risk-free rates and the spike in credit spreads well above 2008 GFC peak is a harbinger of investment default. The usefulness of Solvency II is being tested as ratios are supported by an Ultimate Forward Rate (UFR) which is increasingly at odds with economic reality, while the Volatility Adjustment (VA) is producing a perverse increase in headline ratios. The current environment introduces third party concerns with ratings agencies, credit defaults, and counterparties. Insurers can exhibit solvency ratio increases if corporate credit spreads rise; and  * Asia-Pacific Insurer Solidarity With Western Peer Likely: Global investors should understand the notion of solidarity in time of financial crisis. Europe’s bank and insurance regulator has each called for widespread dividend deferrals/eliminations of its financial institutions. We also fully anticipate solidarity amongst the Asia-Pacific financials with their Western peer. Whilst many of the Asia-Pacific insurers have already adopted some form of the European Solvency II regime, many have also purchased USD-denominated assets in their desperate search for yield in this low/negative rate environment where the impact of credit default and ratings agency downgrades on their investment portfolios is likely to be outsized and challenge capital ratios. We anticipate similar actions with the Asia-Pacific insurers - particularly in Japan, Australia, Taiwan, and South Korea.

* European Insurers Leading Global Insurance Capital Preservation: The ebbing economic tide has significantly exposed the European financial system for what it always was - a low profit, weak capital generating, and highly geared sector which has been dangerously close to loss making for over a decade;* Solvency II Regime Not Capturing Risk:The Corona Crisis and monetary/fiscal response have created a perfect storm for insurers with negative risk-free rates and the spike in credit spreads well above 2008 GFC peak is a harbinger of investment default. The usefulness of Solvency II is being tested as ratios are supported by an Ultimate Forward Rate (UFR) which is increasingly at odds with economic reality, while the Volatility Adjustment (VA) is producing a perverse increase in headline ratios. The current environment introduces third party concerns with ratings agencies, credit defaults, and counterparties. Insurers can exhibit solvency ratio increases if corporate credit spreads rise; and  * Asia-Pacific Insurer Solidarity With Western Peer Likely: Global investors should understand the notion of solidarity in time of financial crisis. Europe’s bank and insurance regulator has each called for widespread dividend deferrals/eliminations of its financial institutions. We also fully anticipate solidarity amongst the Asia-Pacific financials with their Western peer. Whilst many of the Asia-Pacific insurers have already adopted some form of the European Solvency II regime, many have also purchased USD-denominated assets in their desperate search for yield in this low/negative rate environment where the impact of credit default and ratings agency downgrades on their investment portfolios is likely to be outsized and challenge capital ratios. We anticipate similar actions with the Asia-Pacific insurers - particularly in Japan, Australia, Taiwan, and South Korea. 

Taiwan

Taiwan Fire & Marine Insurance Co., Ltd. underwrites automobile, fire, airplane, marine, cargo, as well as other property and casualty insurance.

Taiwan Fire & Marine Insurance Co, Ltd. (2832 TT)

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Taiwan Fire & Marine Insurance Co, Ltd. (2832 TT)

Asian Insurers - Mea EIOPA

* European Insurers Leading Global Insurance Capital Preservation: The ebbing economic tide has significantly exposed the European financial system...

Thomas J. Monaco

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