By Julie Steinberg

A Berkshire Hathaway Inc.-backed Italian insurance company was told by the local regulator to boost its capital, a sign authorities are prepared to press the industry to protect itself from the impact of the coronavirus.

Società Cattolica di Assicurazione - Società Cooperativa, which sells life insurance and other products, said Monday that Italy's insurance regulator had told it to increase its capital by EUR500 million ($555 million) by the early fall. The request stemmed from the insurer's weakened solvency position, it said, a result of the decline in financial markets because of the pandemic.

While many insurers are expecting crimped profits due to the deluge of claims generated by the pandemic, solvency issues haven't generally posed a serious concern yet. The need for more capital could reflect a worse-than-anticipated environment.

Cattolica, in which Warren Buffett's conglomerate has a 9% stake, is listed on the Milan Stock Exchange. Its shares traded down nearly 19% Monday at EUR3.35. The seventh largest insurer in Italy by net premiums written, its market capitalization is around EUR690 million.

The insurance regulator said two of the company's life-insurance subsidiaries had solvency ratios lower than the regulatory minimum. A solvency ratio is a measure of an insurance company's financial strength.

Cattolica's solvency ratio was 160% at the end of last year, and fell after markets zigzagged due to the pandemic. As of May 22, it measured 122%, down from 147% at the end of March.

The insurer said it has been trying to diversify its holdings in recent years, and had reduced its exposure to Italian government bonds to 55% from 73% in 2016. Yet the letter from the insurance authority referenced some subsidiaries' exposure to lower-quality bonds, or those with BBB- ratings or lower, the insurer said.

Berkshire's stake, acquired in October 2017, is a sliver of the company's overall insurance business, which fetches billions of dollars of so-called float, upfront premiums that customers pay and which Berkshire invests for its own gain. Berkshire's insurance holdings include U.S. auto insurer Geico, reinsurer Gen Re and Insurance Australia Group Ltd.

--Giovanni Legorano contributed to this article.

Write to Julie Steinberg at julie.steinberg@wsj.com