Catalonia conflict impacts Spanish re/insurers: AM Best

The political uncertainty created by events following Catalonia’s independence referendum has created volatility in Spanish insurers’ investment portfolios and raised concerns about future access to business, according to AM Best.

After its referendum held on Oct. 1, 2017 the status of Catalonia’s independence from Spain remains unclear. Volatility in the bond market is a concern for Spanish re/insurers, AM Best states in the briefing titled, “Enterprise Risk Management to the Fore as Catalonia’s Sovereign Status Remains Unclear”.

Jessica Botelho, financial analyst, said: “The investment portfolios of many companies typically have a high concentration in Spanish sovereign fixed-income securities. Life insurers are likely to be the most adversely impacted by unsettled bond markets owing to their longer-tail risk and need to manage asset-liability mismatches.”

The research also notes that at the forefront of insurers’ concerns will be their need to ensure stability for customers and other stakeholders. In order to achieve this, many banks and re/insurers (including Seguros Catalana Occidente) have already announced plans to move legal domiciles to non-Catalonian destinations such as Madrid, Alicante and the Balearic Islands, which offer more political, judicial and economic stability.

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