17 June 2005

CEIOPS Financial Stability Report on the insurance and occupational pension fund sector

The CEIOPS Financial Stability Committee prepared a new report on the financial stability of the insurance market in the EU/EEA, as well as the market for occupational pensions and the reinsurance sector, and contains an update of the autumn 2004 report. Overall, 2004 was a good year for insurance companies and pension funds in most Member States, and insurance companies are expected to report further improvements in profitability relative to 2003.

Overall, all three main rating agencies, Standard&Poor’s, Moody’s and Fitch, changed their outlook for the European reinsurance industry from negative to stable.

Member States report a wide range of challenges and vulnerabilities with regards to their insurance sectors. However, the largest concern appears to be the current low yield environment: in countries where life insurance companies have guaranteed returns, low interest rates reduce the margin between investment returns and the guaranteed rates, and indeed opening a gap between the two.

Many Member States drew attention to the many regulatory and reporting changes that European insurance companies face currently. A few countries highlighted the issues arising from the implementation of international accounting standards (IAS), and also ultimately from the new Solvency 2 framework.

. Report

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