The FSA insists that no big UK life offices have breached solvency requirements, despite an unprecedented 11 consecutive days of stockmarket falls which have seen the FTSE 100 drop by 10 per cent in the last fortnight.
However, the regulator refused to be drawn on smaller life offices' solvency. It claims the majority of the consumer market falls within the remit of the top 20 life offices.
Three weeks ago, outgoing FSA chairman Howard Davies said life offices could survive a drop in the FTSE100 to 3,500 – a level reached in the last week, and possibly even 3,000, although the regulator could never provide a guarantee that there would be no failures.
During the recent record run of market falls, which was finally stemmed on Tuesday, life offices were again the main sellers of equities as they aimed to balance their books but the regulator says no life office has reported a breach.
FSA spokeswoman Kate Burns says life companies have sold between £20bn and £25bn in equities over the last 18 months, reducing the average percentage of equities in their portfolios to between 35 and 37 per cent from the traditional level of around 75 per cent.
She says around £30bn in with-profits funds have closed to new business over the last year.
Burns says: “What we have said is that no large life insurers have had to come to us yet saying that they had breached the minimum solvency requirements.”