Capital adequacy weak for some insurers, says IMF

In its UK Article IV Consultation, the IMF suggests the quality of capital in some life insurance companies is suspect where implicit items – namely intangible assets such as future profits – financial reinsurance and subordinated debt are used to boost capital coverage of the required minimum margin (RMM). It adds: “The use of implicit items in capital means that while the Tier I capital ratio is quite healthy, it does not necessarily reflect the strength of core capital, which comprises tangible equity.” Despite this, the IMF suggests the outlook for the life insurance industry has ...