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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PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.