It all started out in the East, in Japan and New Zealand where insurers’ nightmare took shape. Despite the extent of damage in the first half of 2011, the sector then exhibited good resilience. However many players ended the first six months of the year in weakened situation.
As of July and without any transition, insurers have found themselves at the center of a major financial crisis where none of them were involved. Then, bad news started flowing in from the West, especially from the United States. The deterioration of the United States’ sovereign rating sparked off the start of a financial crash which quickly spread to Europe.
The stock exchanges and banks were severely hit by a real storm, dragging the insurers that have been at the centre of the financial machinery. The reasons for concern related to the high exposure to sovereign debt, the decline of financial products and the growing risks of recession.
By way of comparison, the reinsurers, who have been the guardians of the temple, were the only ones spared. Capital continued to flow and reinsurance supply remained well above that of demand. As an evidence of this strength, the rating agencies, so prompt to step in, in 2011, have chosen to trust reinsurers.