Cyprus insurance sector maintained strong capital buffers throughout 2025

The Central Bank of Cyprus released its financial stability report confirming that the domestic insurance sector exhibited resilience throughout 2025 despite a complex and shifting risk environment. Insurance companies and Institutions for Occupational Retirement Provision (IORPs) demonstrated a stable financial position, successfully navigating challenges such as geopolitical developments, climate change, and cyber threats.

Key data reveals that the average Solvency Capital Requirement (SCR) ratio for Cypriot insurers reached 279.8% as of December 31, 2025, significantly exceeding both the 100% regulatory minimum and the 220% median ratio observed across the European Union. While capital adequacy remains robust, the report notes a decline in the sector's liquidity ratio, which fell from 49.8% at the end of 2024 to 47.4% during 2025. Despite this tightening in liquidity, profitability remained positive, with loss and operational expense ratios largely consistent with previous years.

The findings underscore the sector's capability to support both clients and the broader economy, though the Central Bank continues to monitor structural vulnerabilities. Moving forward, the industry is expected to maintain its focus on risk management to mitigate potential volatility from international market pressures.