BoE warns insurers over ability to sell down assets in a crisis
Life insurers could be overly optimistic about their ability to sell down assets in a crisis, the Bank of England has warned.
The BoE’s Prudential Regulation Authority, which supervises the sector, put 16 life insurers through a stress test of credit downgrades and increased longevity. In results published on Monday, it found them resilient, but it said their assumptions for how quickly they could sell down assets following a crisis “could be optimistic”.
Several relied on their ability to sell bonds that had been downgraded to junk, with £8bn to £9bn of such assets expected to be offloaded. Most assumed this could be done within six to 12 months of the event.
This story originally appeared on: Financial Times - Author:Ian Smith
