Featured Product

    EIOPA Updates Risk Dashboard in August 2020

    August 17, 2020

    EIOPA updated its risk dashboard based on Solvency II data for the first quarter of 2020. The dashboard summarizes key risks and vulnerabilities in the insurance sector in EU through a set of risk indicators. Solvency II data is based on financial stability and prudential reports collected from 81 insurance groups and 2,488 solo insurance undertakings. The results show that risk exposures of the insurance sector in EU remain generally high compared to April, as a result of the COVID-19 outbreak. The pandemic continued to cause disruptions in all financial sectors and economic activities, with insurers being particularly exposed to very high levels of macro risk. Market, credit, and profitability and solvency risks are also at a high level.

    Credit risk remains high, as the risk of credit events remains elevated going forward. Profitability and solvency risks also remain high.  and the expected deterioration, subsequent to the COVID-19 impact, is already reflected in some indicators. Asset over liabilities and Solvency Capital Requirement (SCR) ratios for groups and non-life solo registered a weakening. Asset over liabilities and SCR ratios for groups and non-life solo registered a weakening. Furthermore, the break in the sample due to the Brexit withdrawal agreement might distort a larger deterioration for some indicators. The unforeseen increase observed in the SCR life solo is principally driven by the adjustment in the sample after excluding UK companies. Moreover, a positive impact in the SCR life ratio was reported for some specific undertakings due to the increase in the volatility adjustment (VA). A further deterioration for next quarter is still foreseen for SCR ratios, both life and non-life, mainly driven by the low yield environment and possible depreciation of assets in the context of the COVID-19 shock. 

    Insurance risks decreased to medium level. On one hand, year-on-year premium growth for life undertakings significantly declined indicating already a negative impact from the COVID-19 outbreak. On the other hand, year-on-year premium growth for non-life undertakings and loss ratio show a slight improvement. Catastrophe loss ratio continues to increase following the significant events that occurred during 2019 and 2020—namely, the Australian bushfire season.  Market perceptions remained stable at a medium level. Stocks of life and non-life insurance undertakings continued to underperform relative to the market, which, in contrast, experienced an unexpected increase. Insurers’ Credit Default Swap (CDS) spreads returned to lower level, with insurers’ external outlooks showing a net increase in negative revision as of June 2020.

    Some indicators used in this risk dashboard do not still completely capture the latest development in the context of the COVID-19 outbreak; however, the expected deterioration of the relevant indicators reflecting all available information in a forward-looking perspective has been considered in the assigned risk levels, where possible. Expert judgment has been applied in credit and profitability and solvency risk categories. 


    Related Links

    Keywords: Europe, EU, Insurance, Solvency II, Risk Dashboard, Credit Risk, COVID-19, SCR, Market Risk, Solvency Risk, EIOPA 

    Featured Experts
    Related Articles
    News

    HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration

    The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.

    July 29, 2021 WebPage Regulatory News
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    ECB Study Assesses Impact of Basel III Finalization Package

    The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.

    July 26, 2021 WebPage Regulatory News
    News

    ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading

    The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.

    July 26, 2021 WebPage Regulatory News
    News

    PRA Updates Remuneration Policy Statement Templates and Tables

    The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.

    July 26, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7307