Solvency capital ratios of the 20 largest
European insurance groups have started to deteriorate slightly,
according to the European Insurance and Occupational Pensions
Authority (EIOPA).
The insurance sector also remains vulnerable
to a possible long-lasting low interest rate environment, though
the sector would be capable to cope with this challenge for some
time said EIOPA.
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These were the key conclusions in EIOPA’s
biannual report on the financial stability for the insurance and
institutions for occupational retirement provision (IORPs) sectors
in the European Economic Area (EEA).
The report said the majority of insurance
companies are well capitalized according to the current Solvency I
regulation.
By the end of 2011, they were on average
capitalised at 200% of the required levels.
Nevertheless, the report said the
capitalisation and profitability of the 20 largest European
insurance groups are facing now a slightly decreasing trend.
It added that in the case of renewed turmoil,
a failure of governments to stabilise their fiscal situations or a
disruptive unwinding of currency risk, the insurance sector’s
situation “might look different”.
The report said: “While the first order
effects of such events seem to be limited and are likely to hit
only local insurers, the second order effects might hit bigger
European insurers.”
