(Finance) – The Italian insurance market would remain solvent even in the presence of particularly severe shocks. This is stated by theIVASS (Institute for Insurance Supervision), commenting on the results of the Stress Test conducted by the European Authority of Insurance and Occupational Pensions (EIOPA) in close collaboration with the national supervisory authorities. The exercise, carried out with reference to the situation as of 31 December 2023, involved 48 European insurers – 44 groups and four companies, belonging to 20 Member States – which represent approximately 75% of the assets of the European market.
The exercise assessed the iimpact of instantaneous shocks on the solvency balance sheet of insurance entities and their liquidity position. The scenario envisages a context of low growth, high inflation and adverse shocks caused by the intensification of geopolitical tensions which generate a further inversion of the yield curve, a widening of credit spreads, a rise in interest rates and a marked deterioration of the markets equity and real estate. Added to the financial shocks are insurance shocks (increase in life insurance surrenders, the cost of non-life claims and expenses).
The stress exercise highlighted that the occurrence of the hypothesized adverse scenario would cause a significant reduction in the capital position of the European insurance sector, which however at an aggregate level it would remain “solvent”with an average solvency ratio above 100%.
For theItaly they have the 4 groups already involved participated in the European exercise in previous years: General Insurance, Intesa Sanpaolo Insurance, Post office Life and Unipol Group. The coverage of the Italian market, considering all the individual Italian businesses involved in the exercise, is 85%. As in the past, theIVASS has extended the stress test to 7 other national insurerswith assets exceeding 3 billion euros, in order to more fully evaluate the resilience of the national insurance system.
The results of the exercise for the 11 Italian insurance entities as a whole are in line with those of the European sample and indicate that the Italian market would remain solvent even in the presence of particularly severe shocks. In particular, without the activation of reactive management actions (RMA), the aggregate Italian solvency index would decrease by 98 percentage points, going from 233% to 135%. With the activation of the RMAs the average solvency ratio would be reduced to a lesser extent, going from 233% to 149% (not all national insurers have made use of this option).
As emerged at a European level, the Italian insurance sector records an asset/liability ratio exceeding 100%, confirmation of the ability to meet commitments towards insured persons even in a context of adverse developments in the economy and the market.
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