The results show that the risk exposure of the insurance sector in the European Union remained stable. Despite positive macroeconomic developments, low interest rates are still a major source of risk for European insurers. Credit and market risks continued at a medium level. Spreads further decreased and concerns about potential risk mispricing remained. Volatility of equity prices increased and valuations are now slightly lower. Median profitability levels were broadly the same as in the fourth quarter of 2016 and solvency positions continued to be strong for both groups and solo companies. The impact of the natural catastrophes from the third quarter kept insurance risks at a medium level. Market perceptions were mixed, with insurers’ stock prices outperforming the market but at the same time there was a deterioration of the external rating outlook for some insurance groups.
Background
The Risk Dashboard is a quarterly publication summarising the main risks and vulnerabilities in the European Union insurance sector by using a set of indicators grouped into seven risk categories: macro risks, credit risks, market risks, liquidity and funding risks, profitability and solvency, interlinkages and imbalances and insurance (underwriting risks). An additional category “Market perceptions” gives the insight in how the insurance sector is perceived by financial markets. More information is provided in the Background Note.
The data covered by the Risk Dashboard is based on financial stability and prudential reporting of a sample of 95 insurance groups and 2,930 solo insurance undertakings.
April 2018 Risk Dashboard
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