Swiss Re predicts continued growth but warns of regulatory threat

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Swiss Re believes the insurance and reinsurance sectors will continue their "U-shaped" recoveries in 2010 alongside the major global economies.

However it also raised concerns about the looming threat of regulation from European and national authorities in a bid to crackdown on loose financial practices that could risk the fragile improvement.

Thomas Hess, Chief Economist at Swiss Re, speaking at the reinsurer's annual economic forum, said he was "a little bit more confident than a year ago."

Hess highlighted that the top 30 companies were able to restore their capital throughout the year as both insurance and reinsurance markets continued to perform well during the economic downturn.

He said: "The global economy grew in the second half of 2009, but the recovery is still fragile."

"Growth will generally be below trend in the major economies in 2010, but will accelerate modestly in 2011. Monetary policy will shift to tightening in late 2010 at the earliest, and reductions in fiscal stimulus will follow shortly afterwards."

"As a consequence, growth and inflation will be subdued," he added.

Hess also believes that given the sector's routine operation through the crisis, it should be largely excluded from upcoming regulation tightening such as Solvency II.

"Taxpayer support, as far as insurers were concerned, was confined to very few companies, and was almost entirely due to the banking type operations of these companies," he said.

 

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