European Insurance: Solvency II (26 June 2017)

Selected recent Solvency II news items: 

On 23 June, EIOPA published its June 2017 Financial Stability Report. The report includes a section on solvency under the Solvency II. The SCR ratio for the median insurance company was 209% in Q4. It corresponds to 217% for life insurance companies, 207% for non-life insurance companies and 210% for undertakings pursuing both life and non-life business at the same time. It is worth noting that the UK specific figures are much lower at c160%. The regulator's report also includes the following:

• more than half of life insurers' portfolio is composed of fixed-income assets, relying heavily on corporate bonds (financial bonds represent 18% and non-financial bonds 11%) and government bonds (27%);
• insurers are exposed to the domestic as well as cross-border banking sector;
• market data points to a persistent low yield environment but with signs of upward movements and this contributes to one of the persistent main challenges for insurers - maintaining profitability; and
• increasing challenges of cyber risk.