Creditworthiness of life insurers’ bond portfolios stable
In the previous four quarters, the share of bonds with the highest creditworthiness (the so-termed AAA rating) in life insurers’ bond portfolios remained stable. DNB statistics show that as at 30 June 2011, approximately two-thirds of the bonds were rated AAA.
Bond portfolios at life insurers’ risk total EUR 115 billion, the bulk (60%) consisting of government bonds and the rest largely of corporate bonds (30%). The ratio between government bonds and corporate bonds was stable over the past year. Government bonds usually have higher ratings than corporate bonds: 90% of corporate bonds held by life insurers are AAA-rated, against 30% for corporate bonds.
In the period from mid-2009 to mid-2010, Dutch life insurers did increase the share of high-quality debt paper in their bond portfolios. The percentage of AAA-rated debt paper rose from 54% in mid-2009 to 63% in mid-2010. This development reflected two trends: a shift from corporate bonds to government bonds and a change in the composition of government paper. For example, Dutch life insurers increased their positions in AAA-rated countries (the Netherlands, Germany and, to a slightly lesser extent, Austria), while reducing their positions in the peripheral European countries. These changes accounted for an increase in AAA-rated government bonds by 10 percentage points to 90%.