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
Previous ArticleEBA Single Rulebook Q&A: First Update for September 2019
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.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
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.
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.
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.