Insurers see earlier bond price gains evaporate

Statistical News Release
Date 17 March 2011

Dutch insurers saw the value of their bond portfolios drop steeply in the fourth quarter of 2010, down to EUR 170 billion at the end of the year. Meanwhile, the institutions continued to purchase long-term debt certificates, DNB figures show. In doing so, they rebalanced their holdings among bonds issued by euro countries.

During the fourth quarter of 2010, after some quarters of rising prices, Dutch insurers faced stiff price losses on their bond portfolios, of EUR 8 billion (-4.8%), nullifying the price effects over the year. The bond price development reflected that of long-term interest rates. After a declining trend since April, long-term interest rates picked up again from the second half of September. Positive news about economic growth as well as concerns over the implementation of budgetary measures in some euro countries contributed to a 64 basis point rise in the 10-year rate within the euro area during the fourth quarter of 2010, to the 4.1% level recorded at the start of the year.

Long-term debt holdings by Dutch insurers

Insurers showed continued demand for bonds, however, making substantial net purchases of debt paper (+EUR 2.8 billion) – besides small additions to equity holdings. Demand differed strongly among countries of issue. The fourth quarter of 2010 saw EUR 1.6 billion worth of net sales in Irish, Italian, Spanish and Portuguese bonds, especially government paper. Insurers also reduced their positions in French paper built up earlier in the year. Offsetting these sales were net purchases of German and, to some extent, Austrian paper.

Meanwhile, insurers also bought, as they had in earlier quarters of 2010, substantial amounts of Dutch debt (EUR 3 billion). Across 2010, over EUR 6 billion worth of Dutch bonds were purchased, taking total holdings by insurers to EUR 45 billion at end-2010.

For further information, please contact Tobias Oudejans (phone +31(0)20-5243100, +31(0)652496961) or Herman Lutke Schipholt +31(0)20-5242712, +31(0)652496900).