Prudential share price rallies as insurer gets green light on Solvency II rules

on Dec 7, 2015

Prudential share price rallies as insurer gets green light on Solvency II rules

Britain’s largest insurer to announce Solvency II ratios next month
Prudential’s (LON:PRU) share price has advanced this morning after Britain’s largest insurer revealed that it had received approval from the Prudential Regulation Authority (PRA) to use its internal models to comply with the new European-wide Solvency II requirements.
Prudential said in a statement today that it would give an update on January 19 on its capital position under the new rules, ahead of other insurers who aim to issue ratios alongside annual earnings statements. Blue-chip peer Legal & General (LON:LGEN) announced today that it would give solvency details with its results on March 15, while RSA (LON:RSA) said it would report them on February 25.
A replacement for the Solvency I rules was formally created in an EU directive in 2009.The new rules come into force on 1 January 2016. Solvency II requires all big European insurers to hold enough assets to ensure they can keep paying out to customers if the financial system faces another crisis.
“Even though some of the internal model-related overhang is over, we believe that the market would still like to see more details around headline Solvency II rules, details around assumptions going behind the calculation, and sensitivities around the Solvency II ratio,” analysts at JPMorgan Cazenove were quoted as saying in a client note.
Investors have hailed Prudential’s announcement, sending the stock almost two percent higher in early trading today. By 09:36 GMT Prudential’s share price had gained 1.63 percent to 1,530.00p, outperforming the FTSE 100 index, which meanwhile stood just 0.63 percent up at 6,276.82 points.

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