Returns not ensured

Insurance companies have had a terrible 12 months. And the falling value of their equity investments is prompting questions about their credit quality and even their solvency.


‘Indiscriminate widening’ is the phrase being bandied about among followers of insurance company debt. In the US, insurance companies have been left holding the bonds of a string of ‘problem credits’ – Tyco, WorldCom, Kmart and Dynergy – while in Europe their equity market investments have fallen in the region of 30% so far this year.

Spreads have widened much more than for banks partly because “in a falling equity market, investors find it difficult to understand the sector,” says

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