Insurance: almost 10% of companies rejected by stress tests

Nearly 10% of European insurance companies failed the stress tests. This was highlighted today by the European Insurance and Occupational Pensions Authority (Eiopa), which announced the results of the second test aimed at testing the sector's resistance in the event of economic shocks. The tests were carried out on 58 groups and 71 companies in the sector, which at the end of 2010, according to EIOPA, was characterized by a total capital surplus of approximately 425 billion euro. The test showed that 10% of the companies involved (13 companies) would not meet the minimum capital requirements set by the new legislation. The capital surplus would therefore drop by 150 billion, going from the initial 425 to 275. As regards the companies, however, 10 (8%) would not pass the exam in the event of a price shock while 6 (5% ) would be rejected in the event of a sovereign bond shock. The tests were carried out by evaluating the ability of the various companies to reach the minimum capital requirements envisaged by the Solvency II rules within an extremely adverse context, marked by a shock on the price side and a further one regarding exposure to sovereign debt securities. Despite everything, "the results of the test indicate that the European insurance market is well prepared to face the shocks", explained Eiopa.