Along with AIG, Allianz SE, is now among nine insurers deemed systemically important by global financial rule makers, meaning they may face tougher capital standards and tighter regulation. The list of nine too-big-to-fail insurers, including MetLife and Prudential Financial in the U.S. and France's Axa SA, was published by the Financial Stability Board (the "FSB"), the Basel, Switzerland-based body set up by the Group of 20 nations. It is reported by the Daily Business Review on July 19th that the companies on the FSB list were included based on criteria such as size, global activity and the amount of non-insurance businesses they have.
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The FSB, led by Bank of England Governor Mark Carney, is coordinating global regulators' response to the last financial crisis to prevent a repeat of the turmoil that followed the collapse of Lehman Brothers Holdings and the bailout of AIG. Also on the list are Prudential Plc and Aviva Plc of the UK, China's Ping An Insurance Group Co. and Italy's Assicurazioni Generali SpA.
Insurers identified as too big to fail will have to hold higher reserves and draw up recovery and resolution plans to limit the economic fallout should they go bust, the International Association of Insurance Supervisors have reported. Implementation details for higher "loss absorbency requirements" are to be developed by the end of 2015 and will apply starting in January 2019, as reported by the FSB.
A group of U.S. regulators led by Treasury Secretary Jacob J. Lew this month said AIG is systemically important, meaning it could threaten the financial system if it failed. The group, called the Financial Stability Oversight Council, also voted to designate Prudential Financial as systemically risky. Prudential Financial, the second-largest U.S. life insurer, is appealing the designation, which may impose tougher capital rules and extra oversight from the U.S. Federal Reserve.
Allianz is an international financial service provider, reported on their website to be offering solutions to more than 78 million customers in 70 countries. While it is too soon to give a detailed assessment of the ramifications of the FSB designation, it is clear that any recommendation by national or international regulators that certain insurers hold higher levels of capital need to consider the impact on consumers, including the impact on price and availability of certain products and that measures to be implemented in a cross-border consistent manner. Allianz said in a statement on their website that "Allianz enjoys a widely diversified, resilient business model, a very solid capital base and sustainable profitability. Therefore we are well positioned to manage the new requirements this designation will lead to regardless of the specific form they take."
Allianz marine industry insurance services includes marine hull and machinery cover; cargo cover; inland marine coverage; shipyard and marine trades; marine general liability, excess liability, employer's liability and bumbershoot, as well as liability coverage for ship repairers, ports and terminal operators, wharfingers, stevedores, charterers, etc; marine risk consulting; specialist marine policies; property and liability coverages for the marine sector; as well as other specialized coverages for the marine industry.