EIOPA Statistics - Accompanying note Publication references: and Published statistics: [Balance sheet], [Premiums, claims and expenses], [Own funds and SCR] Disclaimer: Data is drawn from the published statistics as of the extraction date (revision of historical series may occur). However, in order to produce the graphs and charts used in this note for illustrative or analytical purposes, certain calculations have been carried out. These are documented or available (as formulas) in the data source on EIOPA s website, unless they represent pure summation or aggregation. Any calculation or formula used for this report should not be interpreted to signify any official EIOPA methodology. 1. Balance sheet structure, main items 1 Assets The asset side of the Solvency II balance sheet is split into investments, assets held for unit-linked business and other assets. Investments represent those held by insurers in order to be able to fulfil the promises made to the policy-holder on an on-going basis. This excludes unit-linked business for which the investment risk is assumed by the policyholder. On an EEA wide basis 2, Figure 1 shows that the investment portfolio of insurers is dominated by bonds. Corporate and government bonds together account for more than 60% of the portfolio. 3 1 Note that some undertakings are exempted from quarterly reporting in accordance with Art. 35(6) of Directive 2009/139/EU. This means that the values in this note, which are based on quarterly reported data, may vary slightly from figures reported based on annual reporting. 2 Data covers the EU plus Norway, Iceland and Liechtenstein. 3 Certain categories of investments, such as equity and bond investments are categorized and identified under Solvency II reporting of the balance sheet under Investments (other than assets held for index-linked and unit-linked contracts). However, where insurers hold such assets indirectly via Collective Investment Undertakings or where those investments represent Holdings in related undertakings, including participations, they will be reported under those categories instead. In addition, insurers could hold additional investments of these asset classes under Assets held for index-linked and unit-linked contracts (where the Solvency II reported main balance sheet does not provide an asset breakdown). 1/9
Figure 1: Investment mix by insurers in EEA following S.02 Balance sheet. 2017 Q3. % Source: EIOPA [] Note: Figure does not include unit-linked business. However, the investments shown in these figures represent only part of the balance sheet. There is also a considerable share of investments for unit-linked business. Figure 2 shows the breakdown of total assets into three main categories (investments as shown above, assets held for unit-linked business and other assets). 2/9
Table 1: Main categories of total assets by insurers in per country. 2017 Q3. EUR million and % Investments (other than assets held for index-linked and unitlinked contracts) Assets held for index-linked and unit-linked contracts Other assets Total assets Eur mn. % Eur mn. % Eur mn. % Eur mn. AUSTRIA 104 608.60 74.1% 19 785.94 14.0% 16 756.74 11.9% 141 151.28 BELGIUM 238 023.82 74.3% 34 734.31 10.8% 47 579.37 14.9% 320 337.50 BULGARIA 2 571.66 70.7% 76.16 2.1% 991.70 27.2% 3 639.52 CROATIA 4 243.85 79.4% 214.94 4.0% 885.61 16.6% 5 344.40 CYPRUS 1 839.45 47.5% 1 267.98 32.7% 769.01 19.8% 3 876.44 CZECH REPUBLIC 13 078.28 70.1% 2 787.96 14.9% 2 783.72 14.9% 18 649.96 DENMARK 284 905.74 63.9% 145 039.73 32.5% 15 922.58 3.6% 445 868.05 ESTONIA 1 046.59 54.5% 669.12 34.8% 206.13 10.7% 1 921.84 FINLAND 35 383.34 45.5% 36 834.23 47.4% 5 536.13 7.1% 77 753.70 FRANCE 2 093 441.49 78.1% 333 610.46 12.4% 254 312.46 9.5% 2 681 364.41 GERMANY 1 809 195.05 82.9% 107 292.34 4.9% 266 671.84 12.2% 2 183 159.23 GREECE 11 624.50 70.7% 2 342.83 14.3% 2 472.48 15.0% 16 439.81 HUNGARY 4 376.28 49.8% 3 742.08 42.6% 669.06 7.6% 8 787.42 ICELAND 892.38 71.0% 48.38 3.8% 316.77 25.2% 1 257.53 IRELAND 76 244.01 21.4% 211 274.99 59.4% 67 946.84 19.1% 355 465.84 ITALY 686 530.79 75.6% 147 931.01 16.3% 73 410.53 8.1% 907 872.33 LATVIA 405.97 59.8% 54.70 8.1% 218.14 32.1% 678.81 LIECHTENSTEIN 2 981.77 10.0% 20 551.33 68.9% 6 315.08 21.2% 29 848.18 LITHUANIA 658.94 50.7% 477.97 36.8% 162.41 12.5% 1 299.32 LUXEMBOURG 48 018.46 21.6% 122 742.08 55.3% 51 081.30 23.0% 221 841.84 MALTA 5 648.34 57.6% 1 161.70 11.9% 2 991.59 30.5% 9 801.63 NETHERLANDS 257 932.52 52.8% 91 353.77 18.7% 139 223.63 28.5% 488 509.92 NORWAY 127 688.32 71.7% 29 171.00 16.4% 21 219.42 11.9% 178 078.74 POLAND 28 729.60 62.2% 13 060.67 28.3% 4 382.47 9.5% 46 172.74 PORTUGAL 35 511.85 67.3% 12 260.62 23.2% 5 020.01 9.5% 52 792.48 ROMANIA 2 390.65 55.7% 736.45 17.2% 1 164.46 27.1% 4 291.56 SLOVAKIA 4 439.48 66.0% 1 239.95 18.4% 1 045.15 15.5% 6 724.58 SLOVENIA 5 459.19 68.5% 1 545.81 19.4% 967.85 12.1% 7 972.85 SPAIN 248 016.16 81.8% 16 706.16 5.5% 38 533.65 12.7% 303 255.97 SWEDEN 173 087.88 55.3% 116 944.35 37.4% 22 710.99 7.3% 312 743.22 UNITED KINGDOM 919 999.83 35.3% 1 237 272.40 47.4% 450 835.76 17.3% 2 608 107.99 TOTAL 7 228 974.79 63.2% 2 712 931.42 23.7% 1 503 102.88 13.1% 11 445 009.09 Source: EIOPA []. Other assets include items such as loans and mortgages, re-insurance recoverables/receivables and own shares. See the balance sheet statistics for a full overview. 3/9
Liabilities Total liabilities consist of technical provisions and other liabilities. This is illustrated on an EEA level in the Figure below. Technical provisions represent the amount of resources to be set aside to pay policy-holder claims and are split into 5 main categories. Other liabilities include debt such as subordinated liabilities and financial liabilities other than debts owed to credit institutions, but also other liabilities such as, for example, deposits from reinsurers. Figure 2: Liability profile insurers in EEA. 2017 Q3. % Source: EIOPA [] 4/9
2. Premiums, claims and expenses (Non-life) 4 Gross written premiums One way of assessing market size is to look at the gross (i.e. before reinsurance) written premiums by reporting country. 5 The Figure below ranks the countries according to the gross premiums written by undertakings in their jurisdiction. There is an ongoing process to eliminate some national differences in reporting of life premiums. Figure 3: Non-life GWP (gross written premiums direct business) per country. 2017 Q3 Year to date. Source: EIOPA []. Excluding undertakings with nonstandard financial year-end. Reinsurance premiums not included. 4 At this stage the statistics only consider premiums, claims and expenses in the non-life segment, since life premiums are not available on a consistent basis. 5 Note that written premiums do not represent exact market size as there could be cross-border activities not captured in the solo data (e.g. premiums written outside the national market under freedom to provide services). 5/9
Net combined ratios and net expense ratios Combined ratios are a traditional measure of profitability in the (non-life) insurance sector. Figure 4 ranks the countries according to their net combined ratio from lowest to highest; also displayed is the expense ratio of each country. Net combined ratio is calculated as the sum of net claims incurred and expenses incurred divided by net earned premium ([R0400 + R0550] / R0300). The net expense ratio is expenses incurred divided by net earned premium (R0550/R0300). 6 The ratios do not include the investments income. A ratio below 1 indicates underwriting profit while a ratio above 1 means that the pay-outs due to expenses and claims exceed the earned premiums. Figure 4: Net combined ratio and net expense ratio by country. Non-life. Q3 2017. Source: EIOPA []. Excluding undertakings with nonstandard financial year-end. Reinsurance premiums not included. 6 The net combined ratio is used rather than gross combined ratio as the data provided in quarterly returns is not sufficient to compute a gross combined ratio. 6/9
3. Own funds and MCR/SCR ratios Insurance undertakings are required by the Solvency II regulation to hold a certain amount of capital of sufficient quality in addition to the assets they hold to cover the contractual obligations towards policyholders. The amount of capital (called eligible own funds) required is defined by the Minimum Capital Requirement (MCR) and the Solvency Capital Requirement (SCR), which depend on the risks to which the undertaking is exposed. If the amount of eligible own funds falls below the MCR, the insurance license should be withdrawn if appropriate coverage cannot be re-established within a short period of time. 7 Holding enough eligible own funds to cover the SCR enables undertakings to absorb significant losses, even in difficult times. Undertakings compliance with the SCR therefore gives reasonable assurance to policyholders that payments will be made as they fall due. The SCR is calculated either by using a prescribed formula (called the standard formula) or by employing an undertaking-specific partial or full internal model that has been approved by the supervisory authority. Being risk-sensitive the SCR is subject to fluctuations and undertakings are required to monitor it continuously, calculate it at least annually and re-calculate it whenever their overall risk changes significantly. As non-compliance with the MCR jeopardizes policyholders interests, the MCR has to be recalculated quarterly according to a given formula. The ratios shown in Table 2 are computed by dividing the respective eligible own funds by the SCR and MCR figures as reported by the insurance undertakings at the end of Q3 2017. 7 If the amount of eligible own funds falls below the MCR and the undertaking fails to re-establish compliance with the MCR within three months, a withdrawal of the insurance license is mandatory in order to guard the interests of policyholders. 7/9
Table 2: MCR and SCR ratios by country. Weighted average and interquartile distribution. 2017 Q3 SCR Ratio MCR Ratio Percentiles Percentiles Weighted Weighted 25th 50th 75th average average 25th 50th 75th AUSTRIA 285% 205% 249% 296% 921% 555% 745% 1028% BELGIUM 192% 149% 170% 252% 421% 331% 462% 635% BULGARIA 204% 148% 210% 312% 429% 127% 223% 465% CROATIA 243% 179% 252% 347% 671% 216% 513% 733% CYPRUS 273% 125% 162% 233% 754% 198% 297% 677% CZECH REPUBLIC 229% 174% 213% 283% 669% 197% 376% 646% DENMARK 309% 203% 295% 365% 787% 349% 662% 1075% ESTONIA 209% 184% 205% 249% 601% 359% 596% 710% FINLAND 216% 192% 210% 246% 717% 618% 766% 898% FRANCE 236% 172% 231% 351% 580% 403% 583% 965% GERMANY 338% 206% 299% 443% 925% 545% 753% 1210% GREECE 182% 137% 159% 201% 474% 246% 343% 516% HUNGARY 223% 191% 225% 269% 575% 329% 469% 690% ICELAND 168% 161% 190% 243% 451% 289% 433% 484% IRELAND 179% 154% 193% 283% 490% 388% 538% 706% ITALY 232% 154% 195% 248% 591% 324% 425% 577% LATVIA 133% 127% 153% 162% 263% 126% 255% 316% LIECHTENSTEIN 215% 148% 222% 337% 611% 363% 517% 769% LITHUANIA 198% 168% 179% 231% 481% 243% 373% 521% LUXEMBOURG 222% 153% 207% 297% 620% 370% 600% 821% MALTA 366% 154% 215% 290% 928% 289% 511% 765% NETHERLANDS 190% 156% 192% 266% 456% 331% 494% 760% NORWAY 216% 157% 199% 235% 527% 351% 413% 601% POLAND 278% 160% 228% 293% 803% 303% 458% 845% PORTUGAL 193% 143% 188% 254% 573% 314% 457% 662% ROMANIA 177% 138% 168% 281% 404% 154% 293% 440% SLOVAKIA 211% 167% 207% 272% 540% 363% 469% 676% SLOVENIA 258% 158% 216% 312% 764% 521% 633% 735% SPAIN 251% 197% 255% 352% 639% 410% 635% 879% SWEDEN 260% 180% 209% 261% 927% 395% 606% 822% UNITED KINGDOM 158% 139% 167% 226% 460% 363% 547% 680% TOTAL 239% 162% 213% 307% 644% 358% 556% 816% Source: EIOPA []. The weighted average represents the aggregate own funds (sum of all undertakings) divided by aggregate SCR or MRC respectively. The percentiles represent the interquartile range (25 th to 75 th percentile) and the median (50 th percentile). 4. Profitability indicators Large insurers 8 in the EEA report their profit and loss figures as part of the reporting for financial stability purposes. The table below shows the distribution of the return on assets (ROA) and the return on the excess of assets over liabilities (as a proxy for the return on equity, ROE) for 2016. The median ROA was 0.45% in 2016, while the median return on the excess of assets over liabilities was slightly above 6%. 8 The sample consists of groups and solos that do not belong to a group within the EEA with total assets of more than 12 billion euro. This reporting is on a best-effort basis only. The table can be found under the section Other indicators and data on the EIOPA webpage for the insurance statistics. 8/9
Table 3: Distribution of the profitability of large European insurers. 2016 10th percentile 25th percentile Median 75th percentile 90th percentile Number of observations Return on total assets (Solvency II) 0.03% 0.21% 0.45% 0.90% 2.38% 114 Return on excess of assets over liabilities (Solvency II) 0.58% 3.27% 6.07% 10.16% 13.04% 114 Source: EIOPA []. 9/9