The International Association of Insurance Supervisors (IAIS) says in a mid-year update insurers globally have seen slight declines in solvency, liquidity and profitability positions at the end of last year from 2021. 

Lower asset valuations at the end of last year including declines in equities, widened credit spreads on corporate and sovereign debt, higher volatility of interest rates and weaker currencies in some jurisdictions fuelled the declines, the mid-year update says. 

The Global Insurance Market Report (GIMAR) half-year update is based on preliminary data collected up to June 30 from 60 of the largest insurance groups and aggregate sector-wide data from supervisors across the globe, covering over 90% of global written premiums. 

“This mid-year update provides interim results of the 2023 Global Monitoring Exercise, as well as a preview of the themes in scope for the deep-dive discussions supervisors will hold at the September IAIS meetings,” Executive Committee Chair Vicky Saporta said. 

“Interim Global Monitoring exercise analysis found limited direct interconnectedness of the insurance sector with banks. 

“However, we remain mindful of potential second-round effects and lessons learnt from recent bank failures, including the speed with which certain crisis events unfolded.” 

The update says the current macroeconomic environment is characterised by persistently high inflation rates in several markets, leading to continued tightening of monetary policy and increased interest rates across many regions.  

“Financial market sentiment remains fragile, with high degrees of volatility and uncertainty.” 

The IAIS says it will expand its analysis on how the insurance sector is managing the challenging combination of increased interest rate, credit and liquidity risks for the final GIMAR report, which will be published by the end of the year.