Keynote speech for AFME's European Financial Integration Conference

 Esteemed colleagues,

It is a pleasure to join you in Frankfurt. I would like to thank AFME for bringing us together for this discussion on Europe’s financial integration.

Frankfurt is a fitting place for this conversation: a city of markets, central banking, insurance and pensions, supervision and European integration. The question before us goes to the heart of Europe’s economic future: how can we build deeper, more integrated and more resilient financial markets?

Europe faces a decisive investment decade. We need to finance the green transition, digital transformation, infrastructure, innovation, defence and competitiveness. These priorities will determine whether European companies can scale, whether citizens can generate savings, and whether Europe can remain resilient in a more fragmented world.

The macroeconomic context makes this sharper. Geopolitical risk no longer sits at the margins of economic policy. Conflicts, trade tensions, dependencies and security concerns increasingly shape market conditions. 

The latest tensions in the Middle East remind us how quickly geopolitical events can generate market and economic shocks. A prolonged block around the Strait of Hormuz would affect energy supply, shipping routes, insurance costs, inflation expectations, bond yields and investment decisions.

This is the environment in which Europe must finance its future. Public budgets will remain essential, but they cannot carry the full weight. Banks will remain central, but bank lending alone will not be enough. Europe therefore needs deeper capital markets and stronger channels to connect private savings with productive investments.

This is the practical purpose of the Savings and Investments Union.

Europe has substantial savings. EU households hold roughly EUR 11 trillion in bank deposits. Mobilising even a fraction into suitable long-term products would make a real difference. But this cannot be about pushing citizens into riskier investments. It must be about offering products that are understandable, fairly priced, well governed and aligned with people’s long-term needs.The Netherlands, my own country, offers a useful example. We know that water can bring prosperity. It connects places, supports trade and creates opportunity. But water only brings prosperity when we channel it well. Canals and locks do not prevent water from moving. They make movement possible. Watermanagement supports good economic outcomes, but only if we adapt to change needed. Until recently, the focus was on managing too much water, yet, with times changing, today, we also take measures to ensure there is water for periods of drought.

Europe’s savings work in a similar way. Europe does not lack savings. But it still lacks sufficiently deep, efficient and trusted channels to bring those savings into productive investment. Unlocking savings should not mean opening the floodgates. It should mean building channels that citizens, firms and investors can trust.

I would like to structure my remarks around three considerations.

First, the opportunity: insurers and pension funds can play a larger role as long-term investors.

Second, the changing risk profile of insurers: private markets, private credit and securitisation can support that objective, but they can also bring assets and investment structures that are less liquid, less transparent and harder to value.

Third, the supervisory response: good supervision does not stand in the way of capital mobilisation. It makes it sustainable.

Let me start with the opportunity.

Insurers and occupational pension funds are natural long-term investors. They manage citizens’ savings, protect policyholders against risk, and invest with liabilities that often stretch many years into the future.

They also start from a position of strength. As of June 2025, insurers reported a solvency ratio well above 200%. For DB IORPs, the funding ratio stood above 120%.

A strong solvency position, accompanied by the long-term nature of insurances’ and pension funds’ liabilities, offers a good background for shifting part of the investments towards direct investments in the real economy, but it also creates responsibility. New investment channels must not weaken the trust on which the sector depends.

People will only save for the long term if short term they are financially confident,if in general costs remain fair, and if long term risks are understandable and institutions resilient. New products and market channels will only matter if citizens see them as reliable and fairly designed. Trust – built through good value products – is therefore not an additional objective of the SIU; it is a precondition for success.

This brings me to the second consideration: the changing risk profile.

Over the past fifteen years, the channels through which companies access finance have changed significantly. After the global financial crisis, policymakers substantially strengthened the banking framework. Banks now hold more capital, manage liquidity more carefully, and operate under tighter leverage and prudential constraints. This has made the banking sector more resilient, while reducing banks’ incentives to hold certain riskier credit exposures on their balance sheets.

At the same time, demand for credit remained, especially from companies that may not access public markets easily. Private markets expanded to meet part of that demand, private credit grew rapidly, and asset managers became more important in connecting borrowers with institutional investors. For insurers and pension funds, this opened new investment opportunities, particularly where assets can provide diversification, long-term cash flows and a premium for illiquidity. 

This development should not be described only as a risk. It can broaden Europe’s financing channels and support the SIU agenda by connecting long-term capital with the real economy. But private markets are not a free lunch. Their benefits come with features that require close attention: opacity, valuation uncertainty, illiquidity, concentration and, in some cases, embedded leverage. 

The growing relevance of private credit is already visible in the data, though not at a concerning level. Private credit exposure of European insurers exceeded EUR 500 billion, representing some 5% of their total assets. For IORPs, the exposure was in the areas of EUR 130 billion, representing around 4% of their total assets.

In the past years, both for insurers and IORPs an upward trend has been observed. Like the data, the trend does not point to an immediate systemic threat. But they show that private credit is no longer a footnote. It is now a relevant part of insurers’ and pension funds’ investment landscape.

Italso shows why supervisors need better visibility to assess the risks behind the clear advantages of diversification and return that long term private credit investments offer. By visibility, I mean the ability to assess these risks properly, supported by adequate data and modelling capabilities. Supervisors need to understand liquidity risk, counterparty risk, and possible sectoral or geographical concentrations, especially where opacity and complexity in structured private credit products may hide vulnerabilities.

The IAIS has described this structural shift clearly. Alternative assets can bring diversification, higher returns, support for the real economy and better alignment with long-term liabilities. But they also bring valuation uncertainty, illiquidity and complexity.

Insurers and pension funds have structural strengths. They do not face deposit runs like banks, and many of their liabilities are long term. But they are not immune to stress. Policyholders can surrender products. Market losses can erode solvency. Similar investment strategies can create correlated exposures across the sector.

There is also a related development that deserves attention. The structural shift is not only about what insurers invest in. It is also about who owns, governs and influences insurance undertakings.

Over the past decade, private equity firms have shown growing interest in acquiring European insurance and reinsurance undertakings. Again, at still a limited number, only 26 EU insurers are currently owned or partially owned by private equity, yet there is a higher concentration in a few member states This ownership can bring capital, expertise and new business strategies. But it can also change incentives inside an undertaking.

Supervisors need to assess whether the owner’s investment horizon aligns with policyholder commitments; whether business models shift towards private credit, illiquid assets or balance-sheet optimisation; whether reliance on reinsurance increases, especially within the same group or from third countries; and whether ownership structures are sufficiently transparent and simple to allow effective supervision, including clear identification of ultimate ownership and control.

This is why EIOPA launched a consultation in February this year on a supervisory statement on the authorisation and ongoing supervision of insurance and reinsurance undertakings related to private equity firms. The purpose is not to discourage investment. It is to promote consistent, high-quality and risk-based supervision across the EU.

This fits directly with the SIU agenda. Europe needs capital, yet capital that comes with governance, transparency and clear alignment with policyholder protection. Long-term liabilities require long-term discipline.

Securitisation raises similar issues. It can help banks transfer risk, diversify funding sources, connect institutional investors with the real economy, and support deeper capital markets. In that sense, securitisation can form part of Europe’s financial plumbing. 

But good plumbing needs transparency. The global financial crisis taught us that complex structures can create the illusion of risk transfer. In reality, risk may become harder to price, harder to monitor and harder to manage. This is also relevant for synthetic securitisation, where unfunded credit protection by insurers may increase counterparty risk and create additional systemic interconnections.

EIOPA supports efforts to improve the functioning of the European securitisation market. A more proportionate and transparent framework can reduce unnecessary frictions, improve due diligence, and make high-quality securitisation easier for long-term investors to assess.

The current reform considers relevant steps, including improvements to due diligence, transparency, risk retention and supervision, as well as a proposed 35% reduction in reporting requirements. But proportionality and lower capital charges are not the same thing.

Capital requirements should reflect risk and rely on sound evidence. If securitisation becomes more attractive because it becomes clearer, simpler and more trusted, that is progress. If it becomes more attractive because risk receives lighter treatment without sufficient evidence, that creates a weaker foundation.

We should also ask whether securitisation, in its current form, meets the asset-liability management needs of insurers. Today securitisation is a marginal asset class for insurers. Many insurers hold long-term liabilities. Some securitisation products have shorter maturities, limited liquidity, complex structures and issuance volumes that remain too small. Capital treatment is therefore only one part of the equation. Insurers will also look at product design, transparency, maturity profile, structural simplicity and market depth. And if insurers invest in securitisation their risks need to be properly assessed within their risk management framework.

Europe should revitalise securitisation by strengthening trust, not by weakening safeguards.

And finally, this brings me to my third consideration: the supervisory response.

Solvency II has served Europe well. It introduced a risk-based framework for insurers, strengthened governance, improved transparency and linked capital requirements more closely to the risks firms actually take. It also helped the European insurance sector remain resilient through repeated shocks: low interest rates, the pandemic, inflation, market volatility and geopolitical uncertainty.

This matters for the SIU because long-term investment requires long-term confidence. Citizens will not entrust more savings to insurance and pension products if they doubt the resilience of the institutions behind them. Market participants will not invest with confidence if rules do not price risk properly. Supervisors need reliable data and effective tools. Solvency II therefore forms part of Europe’s infrastructure of trust.

The new reviewed Solvency II rules that will become applicable from January 2027 open a new phase. They introduce changes that aim to support long-term investment, competitiveness and proportionality. Some changes will release capital and may support investment. For example, the change to the risk margin should reduce the average risk margin by 39%. Other changes affect discount rates, interest rate risk, equity risk and securitisation risk factors, incentivising more investment in 

EIOPA will work within this new framework and support its consistent implementation. At the same time, supervisors need to monitor what happens next. If capital relief supports productive investment in Europe, we should understand where it goes. If it encourages greater exposure to complex, illiquid or harder-to-value assets, we should understand that too. The objective is to ensure that investment grows on a sound basis.

The same logic applies to simplification. Europe should make regulation simpler where it can. EIOPA supports meaningful simplification and burden reduction. In Solvency II reporting, recent work points to a net reduction of around 26% for quarterly templates and 30% for annual templates, while preserving supervisory needs.

That balance matters. Simplification should reduce unnecessary burden, but it should not reduce supervisory effectiveness. Good supervision needs sufficient data, comparable information and convergence across Member States. Otherwise, simplification at European level may simply create new fragmentation at national level.

The supervisory response also needs to reflect the changing pension landscape.

IORPs already invest in alternative assets. Current figures indicate that alternative investments account for around 11.8% of IORP assets, including 4.4% in private credit. Larger IORPs tend to allocate more to these asset classes, partly because scale gives them better access and expertise.

This matters as pension systems change. Across Europe, we see a gradual shift from defined benefit to defined contribution schemes. This shift changes who carries risk. In a DB scheme, the fund or sponsor carries much of the risk and needs to match long-term promises. In a DC scheme, the individual carries more investment risk, and outcomes depend more directly on market performance, costs, defaults, product design and investment choices.

This shift can support broader market participation and more diversified investment strategies. But it increases the importance of governance and consumer protection. Mobilising household savings should not mean asking citizens to carry risks they do not understand. It should mean giving them access to simple, transparent, reliable and well-governed long-term products. This also applies to the PEPP product which was designed to offer a simple, transparent, cost-efficient and mobile retirement savings option with which European citizens could supplement their state pensions. In particular, PEPP can help closing existing pension gaps for those sectors where setting up occupational pensions is not feasible – e.g., self-employed, gig economies – or in that market where there is limited or no collective bargaining tradition. 

Shifting consumers’ savings towards longer term products requires that these products offer value. Hence, supervision in this area is key. EIOPA’s work shows that while only half of EU consumers believe long-term pensions and insurance products offer value, only around 15% of products raise value-for-money concerns, and more than half of these are marketed by fewer than 20 undertakings. That tells us something important. Better outcomes do not only require more products but rather addressing existing issues for some products as the risks are not structural. 

Finally, the supervisory response must adapt to innovation and digitalisation.

A more integrated financial market will also become a more data-intensive market. More private assets create more valuation challenges. More complex structures increase the need for look-through analysis. More digital tools create new dependencies.

Artificial intelligence can help firms improve risk assessment, fraud detection, claims management and pricing. Supervisors can use SupTech to process large datasets, identify concentrations, detect emerging risks and act earlier.

But AI is no longer a distant issue. Already in 2023, 50% of non-life respondents and 24% of life respondents reported using AI in their operations. Preliminary results from EIOPA’s 2025 GenAI survey suggest that 65% of undertakings have already adopted generative AI, with another 23% intending to adopt it within the next three years.

AI will increasingly enter pricing, underwriting, investment and risk management. That is why AI belongs in a financial stability discussion, not only in a technology discussion. It can improve efficiency, but it can also create model opacity, correlated behaviour, third-party concentration and new cyber vulnerabilities. Responsible innovation therefore requires strong governance, human oversight, model risk management and digital resilience.

This links back to EIOPA’s broader strategy.

Europe needs supervisory unity: more consistent outcomes across Member States, better data and stronger cooperation between national supervisors and European authorities. It also needs cross-sectoral thinking, because risks no longer stay neatly within one sector.

Private credit connects insurers, pension funds, asset managers, banks and private equity. Securitisation originators, investors, servicers and rating agencies. AI connects financial firms with technology providers. But greater interconnectedness also means that operational disruptions and cyber risk can spread rapidly across institutions and borders minutes. Integrated markets therefore require integrated supervisory thinking.

Let me conclude.

Europe has the savings. Europe has the investment needs. Europe has insurers and pension funds with long-term horizons. Europe has market participants ready to innovate.

These are strong foundations for deeper and more dynamic capital markets. Yet, mobilising capital sustainably requires more than simply removing constraints. It requires trust, transparency, and robust supervision.

The Savings and Investments Union will not succeed if citizens feel pushed into products they do not trust, if capital flows into opaque structures, or if risks migrate outside banks and accumulate unnoticed elsewhere.

It will succeed if we build trusted channels between savings and investment: deeper capital markets, better pension and insurance products, transparent securitisation markets, private credit that supports the real economy without hiding leverage or liquidity risk, proportionate but risk-sensitive regulation, and supervisors who use data, technology and cooperation to act early.

In the Netherlands, we learned over centuries that prosperity does not come from letting water run uncontrolled. It comes from building the infrastructure that allows water to move with purpose and that adapts to changing circumstances The same is true for capital. Europe’s savings can finance Europe’s future - but only if we build the frameworks and trust that allow them to flow where they are most needed. Our shared task is to make sure they move safely and with confidence. Our shared task is to make sure they flow safely and with confidence.

Thank you.