Large firms will face three scenarios to test resilience
The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) will run an EU-wide stress test in the insurance sector in December 2009.
It said: “The objective is an EU-wide exercise with common guidelines and scenarios, so as to increase the level of aggregate information among policy makers in assessing the European insurance sector’s potential resilience to shocks and to contribute to the convergence among supervisory practises.
Three scenarios will be tested:
- An adverse scenario mirroring the development of capital markets between September 2008 and September 2009
- A more severe and prolonged recession
- A situation of inflation picking up rapidly leading to a steep rise in interest rates. The stress test will focus on market and credit risks
The Financial Times reported that Aviva PLC (AV.LN), Allianz SE (AZ) and Axa SA (AXA) would be among those.
