On 16 December 2014, the European Insurance and Occupational Pensions Authority (EIOPA) published its financial stability report for the second half of 2014.
EIOPA says that the key risks for (re)insurance companies and occupational pension funds continue to be linked to the weak macroeconomic climate, prolonged low interest rate environment and sovereign credit risk. Overall downside risks have increased. EIOPA’s 2014 stress test, the results of which were published on 30 November 2014, explored the risks highlighted in the financial stability report and concluded that materialisation of these risks could have a substantial impact on the insurance sector. The sector was shown to be particularly vulnerable to a severe “double hit” scenario that combined widespread asset price corrections with a decline in risk free interest rates.
The second part of the report analyses and compares several strategies to measure interconnectedness of financial institutions