European Insurance and Occupational Pensions Authority publishes Financial Stability Report highlighting private credit, dollar and cyber and AI vulnerabilities

The European Insurance and Occupational Pensions Authority (EIOPA) published its December 2025 Financial Stability Report assessing risks and vulnerabilities for European insurers and occupational pension funds amid economic fragility, subdued growth and uncertainty about international cooperation. The report finds the sector remains resilient and well-capitalised, but warns that adverse developments could trigger a repricing of risk premia, reinforcing the need for continued monitoring and prudent risk management. Median Solvency Capital Requirement ratios stood at 235% for life insurers, 214% for non-life insurers and 218% for composite insurers, while occupational pension funds’ aggregate funding ratio improved to above 120%. Five deep dives cover exposures and systemic channels including: private credit, where insurers’ exposure reached EUR 514 billion (5.1% of total assets) and IORPs EUR 128 billion (4.4%) at end-2024, with concentration, valuation uncertainty, liquidity risk and hidden leverage identified as key vulnerabilities; US dollar depreciation, with around EUR 1.8 trillion in US dollar assets held by insurers and IORPs at end-2024 and an emphasis on hedging practices and foreign exchange risk management; global interconnectedness, where EEA insurers allocate about 13% (EUR 1.24 trillion) of direct investments to non-EEA instruments and cede nearly 28% of risks outside the EEA; cyber risk as a macrofinancial stability concern requiring closer cooperation, better data and improved modelling of accumulation risks; and artificial intelligence, which could amplify systemic vulnerabilities through correlated model use, investment herding, third-party dependencies, granular risk segmentation and emerging AI-related insurance markets.