Insurance Europe, the European insurance and reinsurance federation, has announced a number of key messages relating to the European Commission’s proposal for a framework for simple, transparent and standardised (STS) securitisation.
The organisation says it supports the encouragement of good securitisation to help fund the European economy.
“Enhanced standardisation, transparency and quality of securitisations (including risk retention requirements) will support insurers’ access and interest in this asset class. More risk-sensitive capital charges are needed in order to achieve a sustainable securitisations market in the EU,” it said.
“In this respect, the current Solvency II treatment of securitisations significantly exaggerates the risks that insurers are exposed to when investing in these assets.”
Continue Reading “Work needed on European Commission framework: Insurance Europe” at Intelligent Insurer News
Five Solvency II Implementing Technical Standards were published in the Official Journal of the European Union at the end of last week, and all five will come into force on 2 December 2015.
These Implementing Technical Standards:
- Specify the regional government and local authority exposures that are to be treated as if they were central government exposures (2015/2011) when a (re)insurer (a) calculates its technical provisions; (b) calculates the market risk, and counterparty default risk, modules of the standard formula SCR; and (c) evaluates the risk mitigation techniques that it will or might take into account for SCR calculation purposes. (In the UK, exposures to the the Scottish Parliament, the National Assembly for Wales, and the Northern Ireland Assembly will be treated as if they were exposures to the UK government instead.) (See articles 101(5), 105(5), 105(6) and 109a(2) of the Solvency II Directive, and article 85 of the Delegated Regulation);
Continue Reading “Blog: Solvency II: 5 Implementing Technical Standards Published In The OJ, And About To Come Into Force” at JD supra Business Advisor
EU regulators must accelerate plans to slash the Solvency II capital charges on investments in asset-backed securities deemed “safe”, Insurance Europe has said.
This comes after the European Commission said in September that it was planning to review the capital treatment of securitisations under the impending regulatory regime, after reaching a political agreement on a framework for identifying simple, transparent and standardised (STS) securitisations is achieved.
The industry trade body has expressed its support for the initiative, but urged the Commission to cut corners in the face of potential delays in discussions about the STS securitisation directive.
In a position paper published on 16 November, Insurance Europe said: “This must not be an excuse to delay the immediate review of the current prudential treatment of securitisations under Solvency II, which, as it stands, is unnecessarily restrictive and punitive.”
Continue Reading “EU urged to rush cuts in charges on safe securitisations” at Insurance Asset Risk
Solvency II regulation, which is aimed at European insurance providers to improve transparency on the cost of capital related to their underlying assets – think of it
as Basel III for insurers – is set to make managed accounts an even more popular vehicle moving forward.
Due to be ushered in on 1 January 2014, the European Insurance and Occupational Pensions Authority (EIOPA) stated that the market wasn’t ready and that it should be pushed back two years. As such, the insurance community must now demonstrate a plan to demonstrate how they will be Solvency II compliant when the regulation comes into effect on 1st January 2016.
In France, meanwhile, the Autorité de contrôle prudentiel (ACPR) decided last year that all French insurers commence Solvency II-like reporting as a preparatory exercise for two years, leading up to the 2016 implementation date.
Continue Reading “Managed Account Platforms offer Solvency II relief” at Hedgeweek News
Stefan Nellshen, CFO at the €8.5bn pension fund for pharmaceutical giant Bayer, has warned that German pension funds will need to close “very substantial financial gaps” if they exposed to the full brunt of Solvency II.
Speaking at the annual aba conference, Nellshen said meeting the “full Solvency II impact”-variant of the stress tests – referring to Example 1 in the quantitative assessment (QA) – would be “almost impossible” for most German IORPs.
“We cannot swallow enough pills to cure the headaches the application of this variant would give us,” he said.
Continue Reading “EIOPA stress tests to give German IORPs ‘headaches’, Bayer warns” at IPE News
For European insurers, life is about to get a lot more volatile. Investors will need to hold their nerve.
The industry will adopt a new capital regime from January. Remarkably, both companies and their investors still cannot be sure exactly what this will mean.
Allianz of Germany, which reported third-quarter results Friday, is one group confident in reporting its capital under the new rules, known as Solvency II. Like others, however, it hasn’t yet been given final approval of its models by regulators.
But what Allianz does report is very useful to investors trying to understand what the new world will look like—particularly when it comes to how an insurer’s capital number can move around over time.
Continue Reading “Allianz Points The Way to European Capital Rollercoaster ” at The Wall Street Journal