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News : International Last Updated: May 24, 2011 - 5:38 AM


Markets News Afternoon: Central Bank plans to "fill a gaping hole in the Irish regulatory framework"
By Finfacts Team
May 23, 2011 - 5:24 PM

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President Barack Obama and Taoiseach Enda Kenny at Farmleigh House, Dublin, MAy 23, 2011.

The Financial Regulator Matthew Elderfield said today that the Central Bank planned changes to Ireland's corporate governance standards are designed to "fill a gaping hole in the Irish regulatory framework."

In an address to the European Insurance Forum, Elderfield said various reports into Ireland's financial crisis had identified a number "fundamental gaps"' in the basic regulatory infrastructure across all sectors.

These included an absence of effective standards for corporate governance and also weaknesses in how the Central Bank is resourced and organised for front line supervision.

Elderfield said insurance is an important and thriving part of the international financial services sector in Ireland and has been one of the clear financial success stories here in spite of the crisis. There were 308 licensed insurance and reinsurance companies in Ireland writing some €58bn gross written premium in 2009. The overall number of companies has stayed stable since 2007, as has the volume of gross written premium in the direct life and reinsurance sectors, while gross written premium in direct non-life has grown significantly.

He said the overall size of the regulatory staff at the Central Bank will approximately double by the end of next year. The number of insurance staff will increase from 42 at the end of 2009 to a target of 113 staff at the end of 2011. "We are also expanding our actuarial capacity - - from 4 qualified actuaries and three trainees at the end of 2009, we now have 7 qualified actuaries and 4 trainees, and by the end of the year we plan to have 8 qualified actuaries and 7 trainees. We have set up a specialist team for supervision of variable annuity firms, created a dedicated team for supervising a large 'hub and spokes' group (of which more in a moment) and also now have a dedicated insurance prudential policy team to lead our implementation work on Solvency II," the regulator said.

Elderfield  said it is also clear that providers of products such as annuities face significant risks, which must be managed carefully. The Geneva Association acknowledges that "VA providers saw their capital positions erode rapidly when markets came under substantial pressure in 2008 and early 2009. This reflected inadequate hedging strategies and substantial tail risk."

He said: "My staff has provided me with a list of twelve insurance companies worldwide that have suffered significant VA losses over the past few years, which have required collectively many billions of Euros of recapitalization. A sense of tact inhibits me from reading out the list of companies, but they are very prominent ones and are firms which on the face of it would for the most part otherwise be considered well managed."

Europe Rattles Global Markets: Europe rattles investors across the planet on concerns the debt crisis is worsening. Fernando Teixeira Dos Santos, Portugal minister of state/finance discusses Portugal's recently approved bailout:

US Markets

In New York Monday, the Dow fell 166 points or 1.33% to 12,346.

The S&P 500 slid 1.41% and the Nasdaq slipped 1.76%.

Live US Indices

European Markets

The pan-European Dow Jones Stoxx 600 dipped 1.74% Monday.

In Dublin the ISEQ has dropped 1.97%.

Aer Lingus is off 7.10%; Ryanair is down 5.30%; IFG is up 8.57% after confirmation of a takeover approach.

European benchmarks

Irish share prices

Euribor Interest Rates

Commodities

Crude oil for June delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $96,91 per barrel down $3.19 from Friday's close. In London, Brent for June delivery is trading on the International Commodities Exchange at $109.36.

Currencies

The euro is trading at $1.4009 and at £0.8704.

Gold

Gold is trading at $1,513.70 per oz in New York.

The Finfacts Gold Page

Eurozone Debt & Global Market Concerns: A look at the external factors in the global economy and the impact on equity markets, with Tobias Levkovich, Citi and Robert Doll, BlackRock:

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