FRANKFURT (Reuters) - Europe's top insurance regulator EIOPA will announce details on Monday of its latest check on how prepared the insurance sector is to withstand shocks like the recent financial market crisis.
The European Insurance and Occupational Pensions Authority (EIOPA) has spent the last seven months testing how well insurers' capital safety buffers hold up against hypothetical challenges to determine whether policy holders could be at risk in a financial meltdown.
EIOPA is not expected to name individual companies that fall short, in contrast to the European Central Bank's review of lenders that prompted a number of banks to raise capital.
"This is not a pass/fail test," EIOPA Chairman Gabriel Bernardino told Reuters earlier this year.
Instead, the watchdog will focus on the sector's vulnerabilities, giving aggregate data on the number of companies whose buffers would fall short of minimum requirements if faced with big swings in interest rates or the value of bonds, equities and real estate, for example.
EIOPA is paying special attention to the effect a prolonged bout of low interest rates would have on insurers' finances and has also probed specific insurance risks such as changes in mortality, longevity, reserves and natural catastrophes.
Regulators have sharpened their scrutiny of insurers after American International Group Inc (N:AIG) suffered massive losses when derivatives bets went sour in the financial crisis.
Big diversified insurers like Allianz (DE:ALVG), Axa (PA:AXAF) and Generali (MI:GASI) are seen as well prepared for new EU capital rules called Solvency II due to take effect in 2016, which form the basis for the tests.
Others may be more vulnerable. EIOPA's last stress tests in 2011 showed about 10 percent of insurers fell short of the required capital buffer in its adverse stress scenario.
(Reporting by Jonathan Gould; Editing by Ruth Pitchford)