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COVID-19 - Impact on Financial Sector - 19 May 2020

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19/05/2020

Please find below a summary of COVID-19 developments relevant to our clients; these alerts are dedicated to following up on the financial  regulators’ responses to the crisis. We have also created a COVID-19 Resource Center to offer legal and business insights as this crisis continues to evolve. We wish you and your loved ones well.

If you have any questions please feel free to contact: 

Tom Van Dyck
+32 475 90 90 91
t.vandyck@liedekerke.com

Freya Mareels 
+32 475 25 11 50
f.mareels@liedekerke.com

Wim Dedecker
+32 491 36 03 99
w.dedecker@liedekerke.com

 

19/05/2020

Opinion no. 39 of the supplementary pensions commission on the draft royal decree on the maintenance of the accrual of retirement pension and of insurance coverage during temporary unemployment as a result of COVID-19

The Supplementary Pensions Commission has analysed the draft Royal Decree on the maintenance of the accrual of retirement pension and of insurance coverage linked to the occupational activities of salaried workers during temporary unemployment as a result of COVID-19 and the accompanying report to the King. The result of this analysis is set out in the Commission’s Opnion No. 39 (available in French or Dutch only). The text of the draft Royal Decree has now been incorporated as Chapter 3 into the Law of  7 May 2020 containing exceptional measures taken in the context of the COVID-19 pandemic with respect to pensions, supplementary pensions and other supplementary social security benefits.

     
19/05/2020

Change of Extraordinary RFR/EDA productions from weekly to two-weekly frequency

EIOPA will continue carrying out extraordinary calculations on a two-weekly basis (instead of a weekly basis as previously carried out) to monitor the evolution of the relevant risk-free interest rate term structures and the symmetric adjustment to equity risk. EIOPA is publishing this information in order to support insurance and reinsurance undertakings in the monitoring of their solvency and financial position.

     
18/05/2020

European insurers face increased risk exposures due to Covid-19, but market perceptions and imbalances remained at medium level 

EIOPA has published its updated Risk Dashboard based on the fourth quarter 2019 Solvency II data.

The results of the Risk Dashboard show that the risk exposures of the EU insurance sector increased as the outbreak of Covid-19 strongly affected the lives of all European citizens with disruptions in all financial sectors and economic activities. Macro and market risks indicators deteriorated in March 2020, moving from high to very high level. The following expectations have been set out with respect to the insurance sector:

  • liquidity indicators are expected to worsen;

  • profitability and solvency risks are expected to deteriorate due to the double negative effect on the asset and liability side;

  • insurance risks have raised to a high level and negative effects via income reduction and increase in claims are expected going forward;

  • credit quality is expected to deteriorate.

     
19/05/2020

Results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD)

The ECB has published the results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets. The survey sets out the following findings: 

  • credit terms remained broadly unchanged for almost all counterparties but are expected to tighten significantly over the next three months, in particular for banks and dealers;

  • financing collateralised by euro-denominated securities have continued to decline;

  • valuation disputes have strongly increased;

  • terms and conditions in secured financing and OTC derivatives markets were, on balance, broadly unchanged compared with one year ago.


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