Browsed by
Tag: Stable

Financial system stable ‘for now,’ but vulnerabilities rising: IMF

Financial system stable ‘for now,’ but vulnerabilities rising: IMF

By Pete Schroeder



a cake made to look like a clock: FILE PHOTO: The IMF logo is seen outside the headquarters building in Washington


© Reuters/YURI GRIPAS
FILE PHOTO: The IMF logo is seen outside the headquarters building in Washington

WASHINGTON (Reuters) – Policymakers’ unprecedented response to the global health crisis has contained risks to the financial system, but a prolonged recession or policy missteps could ignite growing vulnerabilities worldwide, the International Monetary Fund warned on Tuesday.

Loading...

Load Error

The world’s largest multilateral lender said that some banking systems could experience capital shortfalls should the economic downturn in those regions continue, and growing debt burdens in both the private and public sectors could pose future challenges to financial markets.

Given ongoing uncertainty over how quickly the COVID-19 pandemic can be brought under control, the IMF warned that policymakers need to be prepared to continue to provide broad support, and gradually withdraw it only once the pandemic is fully under control.

“As economies reopen, accommodative policies will be essential to ensure that the recovery takes hold and becomes sustainable,” the group wrote in its Global Financial Stability Report ahead of its virtual summit with the World Bank in place of its usual fall in-person gathering.

Video: More corporate job cuts are likely without new stimulus measures (CNBC)

More corporate job cuts are likely without new stimulus measures

UP NEXT

UP NEXT

“Many countries have entered the crisis with elevated preexisting vulnerabilities in some sectors – asset management, nonfinancial firms, and sovereigns – and vulnerabilities are rising,” it added.

While the overall financial system is well-capitalized, for example, there is a “weak tail” of banks, particularly in emerging markets, that could struggle. The growing role of nonbanks in the financial system poses another risk, as these companies do not face the same strict capital and liquidity requirements as banks, the IMF said.

For example, it warned that asset managers could be forced

Read the rest
AM Best Assigns Stable Outlook to Indonesia’s Non-Life Insurance Market

AM Best Assigns Stable Outlook to Indonesia’s Non-Life Insurance Market

Despite a bleak macroeconomic picture, Indonesia’s non-life insurance market is well-diversified and underpinned by solid capitalisation, supporting a stable outlook assigned to the segment, according to a new AM Best report.

A new Best’s Market Segment Report, titled, “Market Segment Outlook: Indonesia Non-Life Insurance,” states that the non-life insurance market’s overall robust return on equity, supported by stable historical underwriting performance and strong balance sheet fundamentals, along with good government support including infrastructure plans and economic stimulus, are factors in the stable outlook.

The Indonesia non-life insurance market expanded by 14% year over year, to IDR 79.7 trillion (USD 5.4 billion) in 2019 from IDR 69.9 trillion (USD 4.9 billion) in the previous year, supported mainly by strong growth in credit insurance. Gross premium written (GPW) for credit insurance, the market’s third largest business line, increased by 86.2% to IDR 14.6 trillion in 2019. Property insurance, the largest business segment, also posted solid GPW growth of 9.7% to IDR 20.9 trillion. However, motor insurance GPW recorded muted growth of 0.3%.

AM Best believes that the non-life market in Indonesia benefits from a good business mix that will help to cushion any negative impact from the COVID-19 pandemic. Unlike other markets, which feature motor and health as the largest lines of business, Indonesia’s non-life segment is dominated by property and motor insurance, while credit, personal accident and health lines account for significant portions of total non-life GPW. Collectively, these five lines make up over 80% of the country’s non-life insurance premiums.

However, the decline in economic activity has had a direct impact on the non-life insurance segment. Non-life GPW in the first half of 2020 declined by 6.1% year over year, with the steepest falls in premiums were seen in the property and motor lines of business. Property insurance GPW

Read the rest