Will Insurers Crash?

Earlier this month, the Belgian-Dutch financial-services giant Fortis made a startling announcement: For the first time in its history, the value of its equity portfolio had dropped below the €12.5 billion the company paid for it.

Under accounting rules the firm will have to write off the difference of about €2.1 billion. The main culprit was the group's insurance operations, whose investments have been ravaged by the cratering stock market. "We've not seen such volatility in the history of the world," says Jozef de Mey, chief executive of the Fortis AG insurance subsidiary.

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