EIOPA’s Financial Stability Report shows continued resilience in insurance amid geopolitical uncertainty and evolving structural risks

The European Insurance and Occupational Pensions Authority (EIOPA) published today its June 2026 Financial Stability Report, which assesses the resilience of the European insurance and occupational pensions sectors in a challenging economic and financial environment characterised by moderate growth, heightened geopolitical uncertainty and evolving structural risks. In addition to reviewing key developments in the sectors, the report also includes deep dives into the implications of geopolitical developments, private markets, artificial intelligence and financial interconnectedness.

The European (re)insurance and occupational pension sectors have maintained their resilience despite continued uncertainty and recent episodes of elevated market volatility. Strong capitalisation and liquidity positions helped the sectors absorb market turbulence associated with geopolitical developments, the repricing of financial risks and shifts in global trade arrangements. At the same time, insurers and pension funds continue to face vulnerabilities arising from financial markets, operational risks, claims inflation and broader structural developments.

The current macro-financial environment is shaped by persistent geopolitical tensions, changes in international trade arrangements and rising defence spending needs. Financial markets remain sensitive to geopolitical events, resulting in heightened volatility across equity, fixed-income and foreign exchange markets. While labour markets continue to support economic activity through low unemployment and rising real wages, uncertainty surrounding inflation dynamics, energy prices and future policy decisions remains elevated.

EIOPA’s Financial Stability Report examines several topics that are particularly relevant for insurers and pension funds in the current environment:

1. Macro-financial developments and structural challenges: The report analyses the financial stability implications of geopolitical tensions, trade fragmentation and fiscal adjustments. It also explores longer-term challenges arising from demographic developments, climate-related risks and the increasing use of artificial intelligence. While AI offers opportunities to improve efficiency across the insurance value chain, it also raises concerns about cyber risk, third-party dependencies, data governance and operational resilience.
2. Developments in the insurance sector: European insurers remained well-capitalised and liquid throughout 2025. Life and non-life premium growth contributed to improved technical cash flows, while profitability benefited from higher investment returns. Despite market volatility during the year, the sector remained resilient. Looking ahead, insurers remain exposed to risks stemming from the repricing of risk premia, interest rate and foreign exchange volatility, claims inflation and developments affecting internationally exposed business lines.
3. Reinsurance sector performance: Reinsurers in the European Economic Area continued to benefit from favourable underwriting conditions and strong solvency positions. While premium growth slowed across several business segments, the sector maintained robust profitability and improved solvency ratios. At the same time, given their exposures, reinsurers should keep monitoring risks associated with natural catastrophes, geopolitical developments and potential disruptions affecting marine and aviation transport.
4. Occupational pension sector developments: The European occupational pension sector remained stable, supported by improved funding positions and positive equity market performance. Total assets remained broadly stable, while the average funding ratio improved during 2025. In addition to sectoral observations, the report also takes stock of the ongoing transition of the Dutch pension system to a defined contribution framework and assesses its implications for investment strategies, hedging activities and market developments.
5. Risks and vulnerabilities for insurers and IORPs: Geopolitical tensions remain the main source of concern identified by supervisors. Sovereign exposures, interlinkages with banks and other financial institutions, developments in private markets and valuation risks associated with less liquid assets also constitute potential vulnerabilities. While insurers’ and pension funds’ exposures to private credit remain relatively limited in aggregate terms, the market’s continued expansion, the increasing complexity of investment structures and potential concentrations warrant ongoing monitoring. Overall, strong solvency positions and adequate liquidity buffers continue to support the resilience of the sectors. 

Go to the Financial Stability Report