Featured Product

    EIOPA Assesses Insurance Sector Risks Based on Q2 Solvency II Data

    November 09, 2020

    EIOPA updated the risk dashboard based on Solvency II data for the second quarter of 2020. The dashboard, which is based on data from 98 insurance groups and 2,507 solo insurance undertakings, summarizes the key risks and vulnerabilities in the insurance sector in EU through a set of risk indicators. For the first time, this risk dashboard also includes a forward-looking element to reflect the expected developments and capture potential distress in the insurance sector for all the risk categories. Based on the data, EIOPA concluded that insurers in EU are slightly less exposed to risks, when compared to the beginning of COVID-19 outbreak, but concerns remain. Going forward, an increasing trend for credit risks and market risks, is expected over the next 12 months.

    Overall, the results show that the risk exposures of the insurance sector in EU slightly reduced, compared to July risk assessment. However, insurers are exposed to very high levels of macro risk, while market, credit, profitability, and solvency risks decreased to medium level. this risk assessment does not account for the outbreak of the second wave of the pandemic. With regard to macro risk, Gross Domestic Product (GDP) growth forecasts at the end of September show the strongest expected decline in the last quarter of 2020 and first recovery in the second quarter of 2021. The effects of the new wave of the pandemic might skew further downward GDP growth. Profitability and solvency risks decreased to medium level. Solvency Capital Requirement ratio for groups slightly improved from the first quarter of 2020 to the second quarter of 2020, though remaining at lower levels than the fourth quarter of 2019. All half-year profitability indicators, which now include the first months of the COVID-19 crisis and their impact on financial returns, show the expected signs of deteriorations. 

    The stabilization of the financial markets at the end of the third quarter 2020 partially eased the challenging situation for European insurers: market and credit risk indicators had stabilized at the end of September 2020. The price gap between stocks and the economic outlook remain a concern, as it could result in sharp valuation adjustments. The creditworthiness of the assets in insurers’ portfolios is under close monitoring. The outlook of those risk categories reflects information available until the third quarter 2020. Insurance risks remain at medium level, driven by general concerns over decrease in premium growth and in some member states over reserve adequacy. More specifically, year-on-year premium growth for life reported a significant deterioration for the second consecutive quarter, indicating a negative impact from the COVID-19 outbreak. While market perceptions exhibit a decreasing trend, they are still at a medium level. 

     

    Related Links

    Keywords: Europe, EU, Insurance, Risk Dashboard, Solvency II, SCR, Credit Risk, Market Risk, EIOPA

    Featured Experts
    Related Articles
    News

    APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness

    APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).

    December 02, 2021 WebPage Regulatory News
    News

    EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance

    The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).

    December 01, 2021 WebPage Regulatory News
    News

    FSB Sets Out Good Practices for Crisis Management Groups

    The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.

    November 30, 2021 WebPage Regulatory News
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Updates Timeline for Implementation of Certain Basel Rules

    Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.

    November 29, 2021 WebPage Regulatory News
    News

    EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR

    EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.

    November 29, 2021 WebPage Regulatory News
    News

    FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR

    The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Capital Adequacy Standards for Banks

    The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.

    November 29, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.

    November 29, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7751