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CEIOPS Financial Stability Committee has prepared a new report on the financial stability of the insurance market and the pension fund sector.
The insurance industry as a whole faces several risks and challenges, the report finds, in particular the risk of low or even again decreasing interest rates as well as risks related to equity markets. A prolonged period of economic recession will be particularly challenging for the underwriting performance, it states.
The financial position of the defined benefit occupational pension fund sector is coming under increased pressure, due to negative developments in equity markets, low interest rates and prevailing longevity risk, the report finds.
However, direct exposures to structured credit products, including subprime related risks remain limited in CEIOPS’ sectors, the report says.