The Croatian Financial Services Supervisory Agency (HANFA) Council on Monday discussed the impact of the corona crisis on the financial services sector, estimating that losses of the funds industry this year would be lower than their 2019 profits.

The HANFA Council concluded that insurance companies could withstand a new shock to the markets.

The meeting among other things discussed the impact of the coronavirus crisis on the financial services sector, new measures for tracking the impact of euro adoption on insurance companies in Croatia, measures proposed by the European Commission for the recovery of the capital markets, and planned legislative amendments, including changes to the role of resolution authorities in the financial sector under which HANFA would be designated as the resolution authority for insurance companies in Croatia.

Three simulations of the possible impact of the corona crisis on the financial services sector, pension and insurance funds, and insurance companies were presented.

The simulation for the next six months showed that estimated losses of the funds industry this year would be lower than their last year’s profits. Insurance companies would be able to withstand a new shock to the financial markets because a drop in the value of liabilities as a result of an increase in the discount rate was expected to outweigh a possible drop in the value of companies’ assets, the statement said.

HANFA estimates that with Croatia’s entry into the euro area, insurance companies will see a decline in their own assets and solvency capital because of an inevitable rise in the amount of technical provisions. That’s why these companies will be required to carry out periodic simulations of the impact of euro adoption on their balance sheet and solvency position and report the results to the regulator.