SII update offers EU insurers €80bn in capital relief, S&P says

Written by Adam Cadle

13/06/2024

The recent update of the EU’s Solvency II regulatory framework is expected to benefit the insurance sector by up to 25 ppts on an aggregate basis, with the industry seeing total capital relief of up to €80bn over 2026-2027, S&P Global Ratings has said.

On 23 April 2024, the EU Parliament approved updated to the Solvency II directive, with member states incorporating the update into national law over the next two years.

“Rising interest rates underpin this positive outcome,” S&P Global Ratings said.

“The Solvency II update includes several measures to ease capital requirements but the gap between the initial estimates and the final result is largely due to the sensitivity of Solvency II ratios to very low interest rates. Should interest rates repeat the ‘lower for longer’ pattern seen between 2015 and 2021, much of the potential capital relief could dissipate.”

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