UK insurance sector still under pressure
The UK insurance sector is again under pressure this morning with concerns that solvency levels will fall over the coming months and more and more companies will be forced to raise additional finance elsewhere. Investor appetite for fundraisings is running dangerously low and there are concerns about how and when additional funding could be raised. One option in traditional markets would have been the sale of non-core assets, but with fewer and fewer buys around this appears to be a non-starter at this moment in time.
In many ways the market itself is a self-fulfilling prophecy as only a couple of weeks ago the sector was buoyed by various comments from leading insurance companies suggesting they would not need additional finance in the short term. However, with concerns about insurance company solvency rates came a fall in the sector and a general fall in the stock market which will in due course feed through to reduced asset backing for these companies.
After seemingly avoiding the malaise when the banking crisis occurred last year it looks as though attention is now focused upon the insurance sector which could in due course attract rescue funding from the government as we saw with the banking sector.
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