EIOPA published the updated risk dashboard, which is based on the Solvency II data for the first quarter of 2019 and summarizes the key risks and vulnerabilities in the insurance sector in EU. The data used are based on financial stability and prudential reporting from 96 insurance groups and 2,868 solo insurance undertakings. Overall, the results show that risk exposures of the insurance sector in EU remain stable.
The results show that the macro and market risks are now at a high level due to a further decline in swap rates and lower returns on investments in 2018; this put a strain on the life insurers that are offering guaranteed rates. The low interest rate environment remains a key risk for the insurance sector. Credit risks continue at medium level, with broadly stable Credit Default Swap (CDS) spreads for government and corporate bonds. Profitability and solvency risks have increased due to lower return on investments for life insurers observed in year-end 2018 data. Solvency Capital Requirement (SCR) ratios are above 100% for most undertakings in the sample, even when excluding the impact of the transitional measures. Market perceptions were marked by a performance of the stocks of insurers, broadly in line with the overall equity markets, while median CDS spreads have slightly increased. No change was observed in external ratings and rating outlooks of insurers.
Keywords: Europe, EU, Insurance, Risk Dashboard, Solvency II, CDS, SCR, Market Risk, Credit Risk, EIOPA
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