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The insurance sector continued to adjust to the new Solvency II regime. Following Solvency II preparation, some European insurers increased their capital position. As of December 2016, the large majority of solo insurance companies reported a Solvency Coverage Ratio above 100%, with a median of 210%, confirming that the insurance sector is adequately capitalised. Insurers’ profitability levels still reveal a relatively stable picture, with a Return on Equity of 9% for the median company. However, the constant pressure on profitability could eventually lead to a deteriorating position in the near future. No major shifts in portfolio allocation are observed.
In the reinsurance sector the situation remains largely unchanged. The demand in the reinsurance sector is still subdued, whereas the reinsurance capacity continues to increase.
In the European occupational pension fund sector, total assets for the euro area increased. The investment allocation remained broadly unchanged and the average rate of return increased. The average cover ratios for defined benefit schemes slightly increased compared to 2015 and remain a concern for a number of pension funds.
EIOPA Financial Stability Report - June 2017