A report has revealed the unprecedented regulatory burden facing asset managers.
CHICAGO–(BUSINESS WIRE)–Link to Fitch Ratings’ Report: Bermuda (Re)insurers Financial Performance (Profitability Strong but Future Less Certain)
Fitch Ratings says in a newly published report that the market of Bermuda-based (re)insurers demonstrates a long history of operating profits and favorable returns, but recent inflows of capital and alternative forms of reinsurance are promoting market consolidation and placing pressure on future profitability.
While considerable financial data is available for public holding companies that own Bermuda-based (re)insurers, the report focuses on GAAP results from 2010-14 for a universe of 20 Bermuda domiciled underwriters.
Continued Reading “Fitch: Bermuda (Re)insurers’ Profitability Strong, But Future Less Certain” at Business Wire News
Solvency-II norms, which call for risk-based capital in insurance, would take more time to be implemented, than was estimated earlier. This is because some players in the Indian insurance sector are not yet ready for a solvency mechanism based solely on risk.
In 2013, the Insurance Regulatory and Development Authority of India (Irdai) had proposed a lower solvency margin for insurers — at 145 per cent against 150 per cent currently — including a risk charge. Earlier, in a proposal on a risk-based solvency approach, the regulator had constituted an expert committee to suggest the roadmap to move to Solvency-II norms. India does not have the requisite statistical database to adopt Solvency-II norms, said a senior life insurance executive.
Continue Reading ” Solvency-II in insurance may take longer to be implemented” at Business Standard News
For more than six years, policymakers have used near-zero or even negative interest rates to help stabilize US and European finances. To some, it may therefore come as a surprise that certain areas of the financial system have been longing for rates to rise. In particular, life insurers need them to pay out fixed rate annuities to pensioners, some of which were agreed when rates were more elevated than today. With rates still negative in certain areas of the Eurozone bond market, European life insurers face notable long-term threats.
To be sure, the headwinds have abated slightly. In mid-April, the average yield on German government bonds or bunds was negative, according to Bloomberg. Today, yields on bunds maturing in 10 years are close to 0.8 per cent, compared with near zero three months ago. Investors can also earn a higher yield by taking on exposure to riskier borrowers or buying bonds with longer maturities.
Continue Reading “Why life insurers haven’t escaped the spectre of negative rates” at FT Alphaville
The European Parliament has published an exchange of letters between the chair of its Economic and Monetary Affairs Committee (Roberto Gualtieri) and the European Commissioner for Financial Stability, Financial Services & the Capital Markets Union (Jonathan Hill).
In his letter of 1 April 2015, Gualtieri referred to the Commission’s two Delegated Acts on third-country equivalence –
- The first for Switzerland, confirming its equivalence for reinsurance, group solvency and group supervision; and
- The (so called) “second package“, for Australia, Bermuda, Brazil, Canada, Mexico and the US, confirming their provisional equivalence for group solvency (only);
before reiterating the Committee’s position “that these Delegated Acts are to be presented in a separate manner, per third country and per area“.
Continue Reading ” Solvency II third-country equivalence – an unexpected fly in the ointment ” at Lexology
Bermuda has completed another milestone on its path to recognition by the European Commission as being fully equivalent under Solvency II.
The domicile has made legislative amendments to define the requirement for a commercial insurer to have a head office in Bermuda, and created authority for new public disclosure requirements for commercial insurers.
The regulations amended the existing economic balance sheet rules to expand the framework to life/long term insurers, to make technical amendments to the Bermuda Solvency Capital Requirement formula, and spelled out financial condition public disclosure requirements.
Continue Reading “Bermuda fulfills EU commitments on equivalence” at Captive Insurance Times
A speech by Sam Woods of the Bank of England (BoE) says a lot about its approach to Solvency II and leaves a lot more unsaid.
Woods said that he wanted to dispel two myths:
- that the BoE plans to use Solvency II to increase required capital across the insurance sector; and that the BoE will keep the current ‘ICAS’ (Individual Capital Adequacy Standards) regime alive after 1 January 2016, rather than “embracing” the new Solvency II regime.
Furthermore firms would have plenty of time to adapt to the regime and were at liberty to make full use of the transitional provisions.
Continue Reading “The BoE approach to Solvency II ” at Lexology
Smaller European insurers should consider the option of subordinated debt as the date of Solvency II implementation looms.
This is the opinion of Oliver Tattan, chief executive officer (CEO) of debt capital provider Insurance Regulatory Capital (IRC).
He explained that the capital solution, which has previously been the domain of large insurers, is now available to small and mid-size insurers and can be very helpful when dealing with Solvency II regulation.
In the past, smaller insurers have used equity or quota share reinsurance, whereas the larger insurers took advantage of subordinated debt. Now, two things have changed,” said Tattan.
Continue Reading “European insurers should consider subordinated debt” at Intelligent Insurer
The European Insurance and Occupational Pensions Authority has called for better public disclosure as part of the incoming Solvency II regime.
A two-page paper published by the body last week said one of the cornerstones of the new regime was transparency. It said: “In order to guarantee transparency, the Solvency II directive requires insurance and reinsurance undertakings to publically disclose essential information on their solvency and financial condition.
“For most parts of the European insurance and reinsurance market this is a novelty and a paradigm shift in terms of communication with the outside world, which previously in terms of prudential information was quite often limited to reporting to supervisory authorities.”
Continue Reading “Eiopa calls for better public disclosure” at FT Adviser