June 25, 2018

EIOPA published the Spring 2018 financial stability report on the insurance, reinsurance, and occupational pensions sectors in the European economic area. The report covers developments in financial markets, the macroeconomic environment, and the insurance, reinsurance, and occupational pension fund sectors.

The report discusses the key risks identified for the insurance and occupational pensions sector. It then elaborates on the risks covering the insurance, reinsurance, and pensions sectors. Next, the report provides the final qualitative and quantitative assessment of the identified risks; the risks are assessed in terms of the likelihood and impact of their materialization, while also using the qualitative questionnaires. The report also includes a thematic article presenting potential drivers of equity investments by insurers.

The financial stability report shows that overall the insurance sector continued to show robust results in 2017. Insurance companies are, on average, adequately capitalized and deliver positive profitability, despite the low-yield environment. The reinsurance industry appears to have sufficient capital to absorb global insurance industry catastrophe losses that were considerably higher in 2017, compared to the long-term average. However, the impact of the large insured losses on future prices in the reinsurance sector is still uncertain.

In the European occupational pension fund sector, total assets increased in the euro area. The investment allocation as well as the average cover ratios for defined benefit schemes remained broadly unchanged. The new framework of information requests for the occupational pensions sector, which was published in April 2018, will allow for a more thorough analysis based on a more complete and relevant data set for the pensions sector from the third quarter of 2019 onward.

 

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Keywords: Europe, EU, Insurance, Reinsurance, Occupational Pensions, Financial Stability Report, EIOPA

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