Our first supervisory stress test was in 2015 for general insurers and we have repeated the exercise every two years, bringing life insurers into it for the first time last year. Our experience has been that these stress testing exercises give us valuable additional insights into firms’ financial resilience, beyond those that can be obtained from the usual solvency capital requirement calculation. 4  See Rule 3.8 of the Conditions Governing Business part of the PRA Rulebook. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  Use of a common scenario enables peer comparison to identify both genuine differences in firms’ risk profile, and potential optimism in any one firm’s modelling and assessments, thus helping firms improve their risk management. It improves our understanding of the potential aggregate, systemic impact of management actions taken rationally by individual firms. It helps us to identify any concentrations in reliance on individual reinsurers, jurisdictions, or external models, for example. It informs our supervisory approach and helps us to identify priorities if a particular scenario crystallizes (e.g. cluster of US hurricanes). The 2019 stress test again indicated general insurers’ resilience to a range of natural catastrophe risks.5 This resilience is reliant on significant levels of reinsurance, particularly from Bermuda, and we worked jointly with the Bermuda Monetary Authority, who highlighted their firms’ reliance on onward reinsurance, and in particular to the capital markets via Insurance Linked Security structures.

Core inflation remains slightly above the historical average of 1.7%. Inflationary pressures in the economy, while not acute, bear very close watching. First, there is tightness in the domestic labour market. The unemployment rate has dipped below 2%. Second, domestic spending remains firm, supported by strong income growth and generally favourable sentiments. Third, global commodities prices remain elevated, reflecting short-term supply constraints. MAS will continue to keep a close watch on inflationary pressures and developments in our key export markets. At this juncture, the current monetary policy stance of appreciating the $ policy band set in April this year remains appropriate. The next Monetary Policy Statement is scheduled for October. I will now go on to MAS’ accounts. 2  BIS central bankers’ speeches  MAS made investment gains of $ billion but recorded overall loss of $ billion due to a strong exchange rate. Excluding exchange rate effects, MAS achieved income and net capital gains totaling $ billion during the financial year (FY) ended March 2011. Stronger global growth led to an upturn across many asset classes; MAS’ diversified investments posted valuation gains. With the recovery in asset markets over the past two years, MAS’ portfolio, excluding exchange rate effects, has more than recovered from effects of the global financial crisis. However, the strength of the Sing Dollar has had a bearing on the valuation of MAS’ foreign assets. Over the FY, the Sing Dollar strengthened considerably against most currencies: 10% against the US dollar and 5.5% against the Euro.