EIOPA published the updated risk dashboard for the third quarter of 2019. This risk dashboard, which is based on Solvency II data, summarizes the main risks and vulnerabilities in the insurance sector in EU through a set of risk indicators of the third quarter of 2019. It is based on financial stability and prudential reporting data collected from 96 insurance groups and 2,843 solo insurance undertakings. Overall, the risk assessment shows that the risk exposures of the insurance sector in EU remained stable. Market risks are high while the credit risks, liquidity and funding risks, profitability and solvency, and insurance underwriting risks remain at the medium level.
The assessment shows that prolonged low interest rates challenge the insurance sector. Market risks, while remaining at a high level, show a decreasing trend due to lower implied bond market volatility since October. Credit Default Swap spreads declined slightly across most bond segments, except sovereign bonds, with credit risks remaining at medium level. Solvency ratios for groups and life undertakings declined across the whole distribution in the third quarter of 2019, but profitability and solvency risks still continue at the medium level. Interlinkages and imbalances show an increasing trend due to higher Solvency II values reported mainly for the largest derivative exposure—interest rate swaps. This could possibly be related to the Asset and Liability Management, or ALM, strategies in response to low interest rates. Market perceptions remain at medium level, with life insurance stock prices outperforming the overall market and non-life stocks under-performing.
Keywords: Europe, EU, Insurance, Risk Dashboard, Solvency II, Market Risk, Credit Default Swap, ALM, Credit Risk, EIOPA
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.