1. IAIS Global Insurance Market Report (GIMAR) Christian Schmidt, Head of Macroprudential SupervisionBudapest, 17. June 2016

2. GIMAR 2015 I 1 (Re)insurance sector remains functioning and stable  Solid capital levels held by (re)insurers  On-going inflow of alternative capital  Moderate premium growth  Reported profitability overall stable  Insurers’ investment yields are gradually declining  Relatively low nat cat losses  Surge of M&A activity

3. GIMAR 2015 I 2 Increasing macro-financial risks Economic and financial environment  Prolonged low interest rate environment  Low economic growth for long time  High and relative to GDP rising global debt  Reduced supply relative to demand for market liquidity  Financial market volatility Impact on insurance industry  European life insurers to increase asset duration  Exposure to illiquid and lowly rated assets (“search for yield”)  Japanese life insurers increased holdings of foreign bonds/stocks  Adjustments to product mix  Shift investment risk to consumers  Less capital intense activities  Erosion of premium rates, pressure on terms and conditions in selected P&C  Pressure on costs and expenses

4. GIMAR 2015 I 3 Total dedicated reinsurance capacity (USD bn.) Source: A.M.Best, Guy Carpenter Note: *estimate by Guy Carpenter and A.M.Best

5. GIMAR 2015 I 4 Reinsurance pricing: change in rate on line for U.S. CAT business, 2007-2015 Source: Guy Carpenter %-change from previous year

6. GIMAR 2015 I 5 M&A in insurance Source: Swiss Re sigma No.3/2015 No. of completed M&As in insurance - global

7. GIMAR 2015 I 6 Thank you for your attention! christian.schmidt@fma-li.li +423 236 7122