The European Insurance and Occupational Pensions Authority (EIOPA) published its financial stability report in June 2026, concluding that European insurers and occupational pension schemes generally remained resilient despite heightened market volatility and geopolitical uncertainty. The report examines the impacts of geopolitical shifts, private credit markets, artificial intelligence (AI), and financial interconnectedness on the sector.
Key findings
- According to the report, European insurers stayed well-capitalised and liquid during 2025. Growth in life and non-life premium income improved technical cash flows, while higher investment yields supported profitability.
- Reinsurers also reported solid solvency positions and favourable pricing conditions, although the pace of premium increases slowed in several lines of business. For reinsurers, natural catastrophes and potential disruptions to maritime and air transport were highlighted as key risks.
- The occupational (IORP) pension sector maintained stability: coverage ratios improved in 2025, total assets were broadly unchanged, and the average coverage ratio rose.
Risks identified
EIOPA emphasises that persistent geopolitical tensions remain the primary risk. Other notable concerns include:
- market sensitivity: equities, bonds and currency markets have shown increased volatility in response to geopolitical events;
- exposures to sovereign bonds and interconnectedness with banks and other financial institutions;
- valuation risks in less liquid assets;
- claims inflation and operational risks that continue to affect insurers.
While overall exposure to private credit is moderate, the authority cautions that rapid market growth, more complex investment structures and potential concentrations warrant ongoing monitoring.
Macro environment and uncertainties
EIOPA notes that the macro-financial environment is shaped by shifts in the international trading system, higher defence spending and sustained geopolitical tensions. Low unemployment and rising real wages supported economic activity, but uncertainty remains significant regarding inflation, energy prices and future policy choices.
Technology: opportunities and threats
The report devotes particular attention to AI’s dual role in the insurance sector. AI can increase efficiency across the insurance value chain, but also raises cyber security concerns, dependency on third-party providers, and challenges for data governance and operational resilience.
Special topics
- The report examines the Netherlands’ pension reform toward a defined contribution model and assesses its implications for investment strategies and the wider market.
Supervisory conclusions and recommendations
Supervisors draw attention to the increasing importance of understanding how risks interact in today’s uncertain environment. They recommend continued vigilance, especially concerning sovereign bond exposures, the expansion of private credit markets and valuation challenges in less liquid assets.
Petra Hielkema, Chairperson of EIOPA, commented that grasping the interactions between risks is becoming as important as identifying the individual risks themselves.
The report was published in June 2026 and bases many of its observations on developments and data from 2025.
This article does not constitute investment advice or a recommendation.
