May 7, 2020 / 3:37 PM / a month ago

Bank of England asks insurers to be ready to raise capital if needed

FILE PHOTO: A man wearing a mask outside the Bank of England as the spread of the coronavirus disease (COVID-19) continues, London, Britain, April 10, 2020. REUTERS/Dylan Martinez//File Photo

LONDON (Reuters) - Britain’s insurers should be ready to tap markets for capital if necessary due to uncertainty over the volume of claims in the coronavirus pandemic, the Bank of England’s insurance regulator said on Thursday.

“What we are asking firms to do and expecting firms to do is to think of different sources of vulnerabilities that might have a financial cost, and their flexibility for action,” BoE executive director for insurance Anna Sweeney told a City & Financial webinar.

Some firms could redeploy funds earmarked for growth to provide capacity to absorb losses, with one insurer already having gone to the market to raise capital, Sweeney said.

“We won’t be surprised to see a range of responses,” Sweeney said.

“It would be not sensible for anyone to rule out the need for cost-effective raising of capital, but we are not seeing a burning platform as we speak,” she added.

Lloyd’s of London insurer Hiscox (HSX.L) this week raised 375 million pounds ($460.88 million) in an equity placing.

Reporting by Huw Jones

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