Dutch slide shows peril of lower solvency ratios

Dutch insurers have watched their stock prices tumble after lowering expected Solvency II ratios – a sign that investors will punish thinly capitalised firms if they foresee regulatory pressure on dividends

Europe's insurers have been guessing for some time how investors might react to the publication of Solvency II ratios, but they need speculate no longer. The market reaction to European firms' half-year results – some of which lowered expectations for these numbers – has been a mixture of ominous silence and loud disappointment, forging what looks to be an unbreakable bond between share prices and solvency ratios.

Before now equity analysts had tended to focus on cash generation and new business