June 20, 2017

EIOPA published its June 2017 Financial Stability Report on the (re)insurance and occupational pensions sectors in the European economic area. The report reveals that the risk-based Solvency II regime was applied smoothly in a low-yield environment and that the European insurance sector is adequately capitalized. The report also includes a thematic article on the empirical and theoretical views on re-evaluation of the capital charge in insurance after a large shock.

The insurance sector continued to adjust to the new Solvency II regime and some European insurers increased their capital position. As of December 2016, the large majority of solo insurance companies reported a Solvency Coverage Ratio above 100%, with a median of 210%, confirming that the insurance sector is adequately capitalized. Following Solvency II implementation no major shifts in insurers’ portfolio allocation were observed. In the reinsurance sector, the situation remains largely unchanged. Alternative capital has continued to grow, albeit at a slower rate in 2015 and 2016. In the European occupational pension fund sector, total assets for the euro area increased. The average cover ratios for defined benefit schemes slightly increased compared to 2015 and remain a concern for a number of pension funds.

 

Related Link: Financial Stability Report

Keywords: Europe, EIOPA, Insurance, Solvency II, Financial Stability

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