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Most European life insurers satisfy Solvency II capital standard

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(Bloomberg) — A majority of European insurers already meet tougher capital requirements set for 2016, the Dutch central bank said as it reported outcomes of stress tests by the European Insurance and Occupational Pensions Authority.

Based on 2013 results as well as the stress tests, most insurers fulfill the so-called solvency capital requirement, the Dutch central bank said in a statement yesterday.

Starting in 2016, the European Union plans to introduce risk-based capital requirements known as Solvency II, specifying how much insurers must hold to meet future obligations and safeguard customers’ money.

In the so-called low-yield module of the stress test, the impact of low interest rate scenarios was tested for 225 European individual life insurers. Under normal circumstances 16 percent of the insurers, including Dutch life insurers, wouldn’t meet the capital requirements. Under a stress scenario this percentage increases to 20 to 24 percent.

The central bank said it will discuss the outcome with the Dutch insurers and expects them to take action in order to be able to meet the requirements before 2016.