The Central Bank of Ireland has published the article “Reinsurance in Ireland: Development and Issues” from the Central Bank’s Quarterly Bulletin for Q3 2014.
“Reinsurance in Ireland: Development and Issues” examines factors which encourage reinsurance companies to locate in Ireland and uses aggregated company-level data to examine the contribution of the reinsurance industry to the Irish economy. The article also considers the financial stability implications arising from the location of these companies in Ireland. The article shows potential implications on the industry from the introduction of Solvency II and growing competition from insurance-linked securities.
The key findings of the research are as follows:
- Ireland is a major centre for reinsurance services, with the second-highest number of reinsurance companies in Europe.
- The industry had total assets of €55 billion at end-2012, which corresponds to over 30 per cent of GDP. The size of the industry’s assets is in contrast with the estimates of value added, which represented just 0.4 per cent of GDP in 2011.
- The number of employees in the industry is low, with just over 400 employees in Ireland in 2011.
- The solvency ratio, measured as the ratio of the available solvency margin relative to the required regulatory margin was shown to have strengthened since 2008.
- The recent low interest-rate environment has contributed towards the industry’s search for higher-yielding assets. An analysis of its investments from 2008 to 2012 shows a movement towards lower grades of investments, while maintaining investment grade status.
The full text of the article is available here