Interim results indicate stable solvency, liquidity and profitability positions in 2023, with slight improvements compared to 2022. Aggregate systemic risk scores increased at year-end 2023, mainly driven by an increase in level 3 assets.
- The 2024 Global Monitoring Exercise (GME) builds on a rich data set collected from approximately 60 of the largest international insurance groups and aggregate sector-wide data from supervisors across the globe, covering over 90% of global written premiums.
- Interim results indicate stable solvency, liquidity and profitability positions in 2023, with slight improvements compared to 2022. Aggregate systemic risk scores increased at year-end 2023, mainly driven by an increase in level 3 assets.[1]
- The 2024 GME analysis continues to focus on key macroprudential themes identified last year, as these remain a priority for both insurers and supervisors. These themes are (1) risks faced by insurers in light of the challenging and uncertain macroeconomic environment and (2) structural shifts in the life insurance sector.
- Other areas of increased supervisory focus highlighted in the report include operational resilience to cyber risk and climate-related risks.
The International Association of Insurance Supervisors (IAIS) today published its mid-year preview of the 2024 Global Monitoring Exercise (GME) analysis in advance of publishing the Global Insurance Market Report (GIMAR) in December.
Building on data collected from approximately 60 of the largest international insurance groups and aggregate sector-wide data from supervisors across the globe, covering over 90% of global written premiums, the GIMAR mid-year update shares interim results on solvency, profitability and liquidity positions and systemic risk developments, and provides an update on the key themes in scope of the 2024 GME.
“This mid-year update provides interim results of the 2024 GME, as well as a preview of the themes in scope for the deep-dive discussions supervisors will hold at the September IAIS meetings,” said Shigeru Ariizumi, IAIS Executive Committee Chair. “While aggregate systemic risk scores increased slightly at year-end 2023, the interim GME analysis found stable solvency, liquidity and profitability positions in 2023 reflecting the overall financial stability of the insurance sector.”
Interim results
Solvency, profitability and liquidity: Interim results from the 2024 individual insurer monitoring (IIM) point to slight improvements in solvency, liquidity and profitability positions. The main factors supporting better solvency positions include higher interest rates in many regions (which can lower the present value of liabilities, particularly for life insurers offering longer-term products), higher premium income, lower dividend payments by insurers, and an upturn in financial markets. Some insurers noted changes to accounting standards, particularly IFRS 17, as a factor affecting profitability. Increases in liquidity positions were driven by higher dividend upstreams (where a subsidiary insurer distributes profits to its parent insurer), completion of asset sales, or better alignment of liquidity sources to liquidity needs. At the same time, some insurers experienced declines in liquidity because of increased cash outflows or changes in their investment portfolio composition.
Systemic risk developments: Aggregate IIM systemic risk scores increased slightly compared to the year-end 2022 data. The key driver for the increase was a rise in the level 3 assets indicator, primarily driven by changes to accounting standards (IFRS 9 and 17). The IAIS is conducting further analysis to evaluate options for a more comparable, substance-based risk assessment of mark-to-model assets that is less dependent on accounting treatment.
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