Brussels, 01/08/2006 (Agence Europe) - Last week, the Commission published its Financial Integration Monitor for 2006 on integration of financial services, the third of its kind. This year, the report is on the increased importance of institutional investors and the external dimension of Community policy in this field. It analyses two major segments of the European market: pension funds, retirement and insurance, and the investment fund sector. With market shares varying between 20% and 40% according to the sector, the EU is a major international financial player. Its position on global markets intensified between 1999 and 2005. This can be seen by its international investment position, a position that can promote better breakdown of global financial risks that could also open potential channels of financial contagion, the Commission notes. The European reinsurance sector is, among other things, a net receiver of US risks.
The European insurance and pension fund sector is in full expansion. In the primary insurance business, premiums have tripled since 1992 to reach €925 billion end 2005 and investment in insurance companies have reached €6 trillion. Assets under management of private pension funds reached €2.5 trillion end 2004, the size of this sector varying considerably from one Member State to the next. Although the insurance sector has known cross-border integration over the past ten years, it nonetheless remains a service that is mostly conducted on a national base. For this reason, operators generally establish their services on national markets.
Over the past ten years, investment funds have benefited from more speedy development on average than that of the banking sector and capital market. The amounts under management have increased more than fourfold to reach €6.4 trillion end 2005. UCITS (Undertakings for Collective Investment in Transferable Securities) dominate the market, accounting for 80% of the total volume generated in the EU. Data on cross-border activity is contrasted. Figures on the cross-border consolidation of placement funds are low and only 17% of UCITS funds are really cross-border, i.e. they are distributed in at least three Member States. Nonetheless, most of the funds newly created are of a cross-border kind and, in 2005, two-thirds of sales in Europe were on this basis. The Commission, however, notes that competition is mainly lacking in the distribution of the funds. (See report: http: //ec.europa.eu/internal_market/finances/fim/index_en.htm).