One in 10 European insurers would be incapable of meeting minimum capital requirements if faced with another financial crisis, according to the European Insurance and Occupational Pensions Authority..
The supervisory authority’s second European insurance stress test has revealed that 13 of the participating groups would fall short of the Solvency II Minimum Capital Requirements, the future regulatory threshold.
A solvency deficit of £3.9bn was discovered when these companies were subjected to the authority’s adverse scenario.
Sovereign bond exposure was covered separately by the EIOPA and was found to cause 5 per cent of participating groups to fall short of the MCR requirements.
The EIOPA stresses that, overall, the European insurance market is “well prepared for potential future shocks” and that the second round of tests are not necessarily indicative of any current solvency problems.
National Supervisory Authorities will discuss the results of the stress test with individual companies, which have not been named, over the coming months.