The MFSA issued a report describing the outcome of the 2025 insurance stress test. The report provides valuable insight into the resilience of Malta's insurance sector under a severe but plausible macro-financial shock scenario. The exercise assessed the impact of factors such as prolonged inflation, market volatility, widening credit spreads, and renewed geopolitical tensions on Maltese insurers.
The findings indicate that the sector remains broadly resilient, with capital and liquidity positions generally capable of absorbing significant stresses. However, the results also highlight areas of vulnerability, particularly among smaller and more concentrated undertakings, and underscore the importance of robust risk management practices.
The impact varied across business models. Life insurers were more exposed to market-driven asset value declines, while non-life insurers faced greater pressure from inflation-driven increases in claims costs and technical provisions. These findings reinforce the need for insurers to continually assess the resilience of their capital, liquidity, and balance sheet management frameworks.
As regulatory focus on stress testing and forward-looking risk management continues to increase, insurers should consider whether their existing frameworks adequately capture emerging risks and evolving market conditions.
How can we help?
At PwC Malta, our insurance, risk, and actuarial specialists help insurers enhance stress testing capabilities, assess solvency and liquidity resilience, and respond to changing regulatory expectations, including in terms of the upcoming application of the Solvency II reform. If you would like to discuss the implications of the MFSA's findings for your organisation, please get in touch.
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