European insurers’ exposures to macro risks remain at high level

Written by Adam Cadle

01/02/2022

European insurers’ exposures to macro risks have remained at a high level, while all other risk categories, such as insurance as well as profitability and solvency risks have stayed at medium levels, EIOPA’s latest risk dashboard based on Solvency II data from the third quarter of 2021 has shown.

Macro risks remain at a high level, amid upward revision of inflation forecasts. The 10 years swap rates have increased across currencies in the third quarter of 2021. Unemployment rates remain high, and monetary policies remain accommodative. Asset purchases continue at a slower pace and are expected to decelerate further.

After six quarters of increasing trends, the solvency position for groups decreased, but still remain above year end 2020 level. The SCR ratio for solo life undertakings slightly improved, and profitability indicators reported a slight deterioration, with a rise in the net combined ratio for non-life business.

Insurance groups’ exposure to banks decreased, while the median investments in insurances and other financial institutions rose slightly. Insurance risks remain at a medium level with year-on-year premium growth for life insurance showing a slight deterioration.

ESG related risks are at a medium level, and the catastrophe loss ratio decreased slightly compared to the previous quarter.

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