London, Apr 17: Aviva, the UK's biggest insurer by premiums, said its life insurance operations have 2.63 times the minimum capital needed to write new business under new regulations coming into force this year. The company estimated it has 4.3 billion pounds (USD 7.67) of surplus assets to cover 1.6 billion pounds of potential liabilities its with-profits business may face under the new rules, the company said. The regulations make new assumptions of potential market declines that could erode an insurer's capital for payouts.

The financial services authority is introducing so-called realistic reporting rules later this year to provide a better measurement of life insurers' liabilities. UK insurers may cut equity holdings to reduce risk levels under the rules, which make them account for probable on guarantees and other discretionary payments to policyholders for the first time.

Liabilities, and the amount of capital that must be reserved against them, will increase at many UK insurers as a result. In particular, the rules will affect insurers' with-profits life funds, which pay customers a share of profit, typically in the form of a bonus.
Bureau Report