Summary: EXECUTIVE SUMMARY1 The Irish insurance sector—comprising both the domestic industry and a large international market—is highly concentrated, and the majority of Irish (re)insurers are part of large international groups/conglomerates. While the total number of insurers declined from 307 in 2009 to 234 at end-June 2014, total assets held by Irish (re)insurers increased from €139.5 billion in 2008 to €210.7 billion at end-2013. The top five life insurers accounted for 91 percent of Irish risks while the largest non-life insurers had a market share of 57 percent in terms of gross written premiums. The top ten reinsurers accounted for 75 percent of premiums written in Ireland in 2012. The majority of the (re)insurers operating in Ireland are part of large international groups or financial conglomerates. In addition, insurers authorized in the European Union (EU) can write business in Ireland on a freedom of establishment (FOE) or freedom of services (FOS) basis. Life insurers in the Irish international market offer mainly variable annuities (VA) and Italian focused unit-linked policies (ULPs) while captive (re)insurers and reinsurers have a significant presence. A significant proportion of the non-life sector is foreign-risk focused. The prolonged low interest rate environment has been identified as a significant risk for international insurers writing VA business as the products are designed with built-in guarantees. Domestic life insurers are somewhat insulated from interest rate/market risks as their dominant line of business is ULPs, in which policyholders assume the investment risks. Given intense market competition, non-life, insurers have been particularly reliant on investment returns, which have been under pressure in recent years. In this regard, reserve adequacy and investment risk appetite have been a focus of the Central Bank of Ireland (CBI)’s engagements with insurers. While Irish reinsurers pose a limited domestic financial stability impact, their operations have global systemic implications and they confront various challenges posed by the global economic environment such as low interest rates, price/rate reductions, excess capacity and greater retention rates by primary insurers to contain costs.

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