Differences in the business models of banks and insurance companies have meant that European insurers have so far been less adversely affected by the economic dislocation following the financial crisis of 2008 and 2009 and the current sovereign instability in the eurozone than have European banks, according to a report released Tuesday by Moody's Investors Service Inc.

While it is difficult to make like-for-like comparisons between banks and insurers, certain characteristics of insurance companies have so far provided them with greater credit resilience than banks, according to Antonello Aquino, senior vice president at Moody's in London and author of the report.

He said that, on average, European insurers likely would continue to be more resilient to the ongoing economic difficulties than would European banks.

In the report, “European Insurers' Performance During Crisis Highlights Distinctions with Banks,” Moody's identified several key factors that it said indicated the insurance sector's resilience to the crisis relative to banks.

Those factors, it said, include the sector's minimal reliance on capital markets, particularly for funding, and good levels of asset-liability matching and asset liquidity. Other factors include good underwriting profits for property/casualty insurers and the ability of life insurers, under certain contracts, to share some of their investment losses with customers.

Insurers are not, however, immune to a sharp deterioration in economic conditions in Europe, Moody's noted, and have in the past been severely affected by the combination of a catastrophe losses and financial market turmoil.

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Currently, the report noted, about half of the European insurers rated by Moody's carry a negative outlook or are on review for possible downgrade. And some insurers with heavy concentrations in countries where sovereign credit quality has significantly weakened have been downgraded, it added.

Any further deterioration in the economic environment could put pressure on European insurers' financial strength ratings, Moody's said.

And a future financial crisis with different effects, such as a significant equity market shock or a sustained period of low interest rates, could more adversely affect insurers than banks, it noted.