Ratings agency Moody's has warned that 50% of European insurance

companies, could face the possibility of a credit rating downgrade and that most carried a negative business outlook.

Economic trouble in the eurozone is to blame for the poor prospects of many insurers, although the present difficulties have affected insurers far less than the banking sector. Insurance companies with heavy exposure in Spain and Italy are seen as being particularly at risk.

Moody's say European insurance companies have suffered less since the financial crisis in 2008, because of their minimal reliance on capital markets for funding, as well as good levels of asset liability matching and asset liquidity, leading to them having less need to crystallise losses in periods of market stress.