Financial fundamentals remain the primary drivers of credit risk. Across more than 7,400 companies and 280,000 firm-year observations, profitability (ROA), leverage and size collectively explain the vast majority of variation in credit risk.
Geopolitical resolution is the master assumption. Equity markets are pricing a framework agreement by September, consistent with the prediction market consensus and the pronounced kink in VIX term structure at Q3.
The global insurance industry is estimated to have grown by +7.1% to EUR6.9trn in 2025, adding EUR456bn to the global premium pool. Although growth moderated from the exceptional +9.4% recorded in 2024, it remained comfortably above the ten year compound average growth rate (CAGR) of +5.6%, confirming that the industry’s growth drivers remain firmly intact. Life insurance remained the largest segment (EUR2,861bn), followed by P&C (EUR2,320bn) and health (EUR1,688bn).
Extreme heat is emerging as a structural economic risk, with Europe highly exposed. Heat stress events have multiplied sevenfold since the 1980s while the average death toll per event has risen fivefold.
AI and trade are no longer separate policy domains. AI growth depends on globalized supply chains for semiconductors, computing infrastructure and digital services while trade is increasingly shaped by who controls AI infrastructure, data flows and cloud capacity.
Is one of the world’s most important pricing signals entering a new era? Since 2015, the 10-year spread between US Treasury yields and Eurozone German Bunds has ranged between 100bps and 270bps.
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