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Business and Economics > Insurance

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Cover IMF Staff Country Reports
Republic of Korea: Financial Sector Assessment Program-Technical Note-Systemic Risk Analysis, Financial Sector Stress Testing, and an Assessment of Demographic Shift in Korea
International Monetary Fund. Monetary and Capital Markets Department
This note presents the systemic risk analysis conducted for the Republic of Korea in the course of the 2019 Korea FSAP. It comprises a forward-looking solvency analysis for banks, insurers, and pension funds, a liquidity stress test for banks, and an assessment of network and interconnectedness for a wide range of financial sector entities and their ties to the real economy. Various structural characteristics of Korea’s economy and its financial system informed the features and focus for its forward-looking risk analysis. They include Korea’s strong export orientation, limited diversification, and its key role as a node in regional and international supply chains. Korea’s financial system has grown by 40 percentage points of GDP since 2013, enhancing the importance of a deep financial sector analysis as conducted through the FSAP. Mortgage insurance schemes are widely used—which was reflected in the way the risk assessment for banks was conducted. Korea’s life and non-life insurance sector is large, highly concentrated and saturated. Fintech developments keep accelerating, in terms of its Open Banking system and e-money providers. Demographic developments in Korea are among the most adverse world-wide, implying a continuous drag on demand, downward pressure on interest rates, financial firms’ income, and hence their capitalization unless they will be altering their business models.
Keywords:
ISCR; CR; financial system; sensitivity analysis; balance sheet; banking system; central bank; credit risk; housing market; return on assets; sovereign bond; bond yield; real GDP; market structure; solvency analysis; Insurance; Loans; Stress testing; Commercial banks; Insurance companies; Global
Cover IMF Staff Country Reports
Republic of Korea: Financial System Stability Assessment and Press Release for the Republic of Korea
International Monetary Fund. Monetary and Capital Markets Department
This paper presents Financial System Stability Assessment (FSSA) with the Republic of Korea. The Korean authorities have continued their efforts at upgrading the prudential, legal, and supervisory framework for the financial sector, and keeping up with international standards and practices in other G20 jurisdictions. The authorities have been strengthening the system with micro and macroprudential measures against vulnerabilities, strengthening the crisis management framework, and upgrading the prudential and legal framework. The FSSA suggests moving toward a more forward-looking monitoring and systemic risk identification mechanism. The reliability of various stress tests could be augmented with advanced methods, system-wide monitoring, and testing the overall leverage related to residential properties, households’ resilience to adverse shocks, and sovereign contingent liabilities. Stronger focus is required on systemic risks emanating from securities market activities that can amplify contagion, including sudden redemption and liquidity pressures in the funds and asset management industry.
Keywords:
ISCR; CR; Korea's financial system; bank; holding company; onshore financial markets; exchange rate; central bank; Commercial banks; Financial sector stability; Insurance; Loans; Liquidity; Global; Asia and Pacific
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: 2018 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
International Monetary Fund. Western Hemisphere Dept.
This 2018 discussion on common policies of the Eastern Caribbean Currency Union (ECCU) highlights that the member countries are gradually recovering following the catastrophic impact of Hurricanes Irma and Maria in 2017. Conditions remain favorable to growth, however, risks are increasing. The fiscal balance for the region as a whole worsened in 2017, reflecting lower inflows from citizenship-by-investment programs and higher reconstruction and current spending. The IMF team made several policy recommendations including shifting focus from the current emphasis on recovery from natural disasters to building ex-ante resilience. The report also recommends intensifying decisive and timely actions to resolve weaknesses in the financial sector, including longstanding problems in the banking sector and emerging risks in the non-banking sector. The authorities expressed commitment to the acceleration of key reforms to upgrade and strengthen the financial sector regional oversight framework. In addition to fiscal consolidation, injecting new vigor into the structural policy agenda will help enhance competitiveness and make growth more inclusive.
Keywords:
ISCR; CR; ECCU country; ECCU price aggregate; Cartac; ECCU debt target; ECCU authority; ECCU region; ECCU work program; ECCU aggregate; Natural disasters; Insurance; Nonperforming loans; Credit bureaus; Caribbean; Global; staff advice; IMF's transparency policy; IMF's article
Cover IMF Staff Country Reports
Slovak Republic: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Slovak Republic
International Monetary Fund. European Dept.
This 2015 Article IV Consultation highlights that Slovakia remains among Europe’s stronger economies, with growth continuing to pick up in 2015, driven by strong domestic demand. A push to spend expiring European Union funds has underpinned rising investment while job creation and real wage growth have supported private consumption. Unemployment has fallen significantly since 2013, but is still about 11 percent overall, and is much higher for the long-term unemployed, youth, and women. The outlook is favorable with growth of 3–3.5 percent expected through the medium-term, reflecting sustained domestic demand as well as further contributions from the important export sector as substantial additional foreign auto sector investment is planned.
Keywords:
ISCR; CR; energy company Enel; energy company; ente nazionale per l'energia elettrica; student housing cost; carmaker Jaguar Land Rover; energy company EPH; staff appraisal; Labor markets; Unemployment; Loans; Europe; Global
Cover IMF Staff Country Reports
Turks and Caicos Islands: Financial Sector Assessment Program - Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This paper discusses key findings and recommendations made in Financial System Stability Assessment for Turks and Caicos Islands. Although the financial oversight framework has significantly improved, the Financial Services Commission (FSC) should strive for further progress. Major advances have been made regarding the operational independence of the FSC and staffing. Nonetheless, the outdated Banking Ordinance and Insurance Ordinance need urgent overhaul. The functioning of the FSC should be strengthened by enhancing Board oversight, filling key positions at Board and senior management levels, strengthening communication and consultation with the industry, and improving the supervision and risk assessment capacities of FSC staff.
Keywords:
ISCR; CR; TCI bank; financial crisis; asset quality; bank distress; U.S. dollar; parent bank distress; financial support; parent-bank funding; bank capital; E. bank resolution; holding company; cash flow; FSC insurance department; Insurance companies; Insurance; Nonperforming loans; Credit; Global; Caribbean; North America
Cover IMF Working Papers
With Great Power Comes Great Responsibility: Macroprudential Tools at Work in Canada
Mr. Ivo Krznar
and
Mr. James Morsink
The goal of this paper is to assess the effectiveness of the policy measures taken by Canadian authorities to address the housing boom. We find that the the last three rounds of macroprudential policies implemented since 2010 were associated with lower mortgage credit growth and house price growth. The international experience suggests that—in addition to tighter loan-to-value limits and shorter amortization periods—lower caps on the debt-to-income ratio and higher risk weights could be effective if the housing boom were to reignite. Over the medium term, the authorities could consider structural measures to further improve the soundness of housing finance.
Keywords:
WP; mortgage; LTV; loan; LTV ratio; housing market; mortgage insurance; macroprudential regulation; risk weight; mortgage credit; housing loan; guarantee cover; Mortgages; Loans; Housing prices; Housing; Credit; Global
Cover IMF Staff Country Reports
France: 2013 Article IV Consultation
International Monetary Fund. European Dept.
This 2013 Article IV Consultation highlights that in a context of weakening economic conditions in Europe and sizeable fiscal consolidation and domestic policy uncertainty, the French economy flat lined in 2012. However, recent improvements in economic indicators support the expectation of a gradual recovery in the second half of 2013. Credit conditions remain supportive, and private demand is unencumbered by balance sheet repair issues and thus more apt to respond favorably to an improvement in confidence. The economy is projected to contract by 0.2 percent in 2013 and to grow by 0.8 percent in 2014.
Keywords:
government projection; General government balance; policy uncertainty; structural adjustment; potential GDP; supervisory authorities; Labor markets; Loans; Insurance; Securities; Europe; Global
Cover IMF Working Papers
Bank Funding in Central, Eastern and South Eastern Europe Post Lehman: A “New Normal”?
Gregorio Impavido
,
Mr. Heinz Rudolph
, and
Mr. Luigi Ruggerone
CESEE banks are reducing foreign funding sources in response to reduced external imbalances, reduced ability to tap international savings, banking group own strategies, initiatives by some regulators, and consistently with uncertainties surrounding the future of the banking union project. In the medium term, the global regulatory agenda and the high foreign presence and stock of FX loans exert opposite forces on rebalancing trends. In the long-term, any funding “new normal” will be determined by the future design of the EU financial architecture. In the meantime, limiting leverage, the use of FX loans and promoting aggregate saving through macro policies and capital market reforms will increase resilience against shocks going forward.
Keywords:
WP; banking sector; financial market; vis-à-vis bank; exchange rate; real GDP; Global Regulatory Agenda; Eastern Europe; Bank Funding; Deleveraging; parent bank; BNP Paribas; market capitalization; banking group; CDS price; BIS bank; Crédit Agricole; banks vis-à-vis; DSK bank; bank capital; FX loan; Loans; Pension spending; Commercial banks; Insurance; Western Europe; Global; Europe; Asia and Pacific; Baltics
Cover IMF Staff Country Reports
Republic of Kosovo: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This article summarizes the financial performance and crisis management of the Republic of Kosovo. Kosovo’s economic condition shows stability in systematic risks, but it also has vulnerabilities. Kosovo banks are exposed to macrofinancial risks because of its open economy, but the Central Bank of the Republic of Kosovo (CBK) has immensely promoted the growth and stability of the banking sector. CBK should also monitor certain interest rates, tax rates, and foreign rates. The current system should allow the growth of microfinance institutions to reach the competition in the global banking sector.
Keywords:
ISCR; CR; central bank; return on equity; financial system; bank assets; interest rate; reserve fund; banking system; Commercial banks; Lender of last resort; Loans; Insurance companies; Insurance; Europe; Global
Cover IMF Staff Country Reports
Republic of Armenia: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
Armenia’s growing financial system is dominated by banks, and its regulatory and supervisory system is robust. The Executive Board of the International Monetary Fund (IMF) has recommended the Central Bank of Armenia (CBA) to develop a program to gather information and monitor the hedging ability of borrowers. Liquidity requirements in foreign currency would be an important risk mitigant particularly because the CBA has a limited ability to extend foreign currency emergency liquidity assistance. Implementation of the pension reform in 2014 will bring additional investments to the market.
Keywords:
ISCR; CR; CBA law; CBA board meetings; CBA regulation; CBA data; CBA staff members; problem bank; Insurance companies; Insurance; Loans; Commercial banks; Stress testing; Global