China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Carney: UK is ‘investment banker for Europe’

The governor of the Bank of England has repeated his calls for a “smooth and orderly” UK exit from the EU, saying that a transition out of the bloc will happen, it was just a case of “when and how”. Responding to the BoE’s latest bank stress tests, where lenders overall emerged with more resilient […]

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China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Categorized | Insurance

Insurers face clash of rules

Posted on May 31, 2012

Regulation is changing the equation for European insurers operating in the US.

At least one disposal is certain: the European Commission has ordered Dutch group ING to offload its insurance and investment management business in the US – along with that in other regions – as a condition for receiving state aid during the financial crisis.

    Regulatory concerns could also push Europeans to sell their US operations in a less direct manner, say analysts.

    The capital-intensive nature of many US life assurance products make American operations obvious disposal candidates for European groups whose regulatory capital positions are a potential problem.

    They include Aviva, whose incoming chairman and interim chief executive John McFarlane acknowledged last month that the UK insurer needs to improve its capital position “materially”.

    Yet with US life companies trading at a discount of about 10 per cent to their book value, analysts say few European insurers will be in a hurry to sell the assets.

    Prudential paid only 46 per cent of European embedded value – an insurance-specific measure – for Swiss Re’s closed US business.

    Still, new rules threaten to bring matters to a head.

    Brussels is in the process of deciding which countries it deems to have an “equivalent” regulatory system to Solvency II, the capital requirements regime due to take effect at the start of 2014.

    Unless a country is deemed equivalent, EU-based insurers’ overseas operations would have to comply with Solvency II as well as local rules.

    Kevin McCarty, president of the National Association of Insurance Commissioners, indicated last month that US regulators had no intention of becoming equivalent.