Solvency II: IFoA explains legal requirements of directive

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Posted on 7th April 2015 by Solvency 2 News in Europe |UK

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The IFoA has published a policy paper to explain the new legal demands on insurers under Solvency II.how-to-explain-3d-printing

The document was published on 1 April to coincide with the date from which insurance companies can submit applications for approval of internal models, matching adjustments and volatility adjustments by the Prudential Regulation Authority (PRA).

The PRA aims to make a decision to approve or reject any application within six months of receiving it. For standalone applications to use volatility adjustments (applications that are not dependent on other approval decisions), the regulator aims to decide within six weeks.

Continue Reading “Solvency II: IFoA explains legal requirements of directive” at The Actuary News

SPOTLIGHT: Mexico’s insurance and surety law

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Posted on 6th April 2015 by Solvency 2 News in Mexico

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Mexico’s new insurance and surety law came into force on Saturday, giving the country one of the most sophisticated regulatory frameworks on insurance in the world.lexi-mexico1

The law introduces a three-pillar solvency framework, with pillar I based on capital adequacy and valuation, pillar II on enterprise risk management (ERM), and pillar III on market disclosure.

Despite officially being introduced on Saturday, the quantitative aspects, or everything that falls under pillar I, will not come into force until April 2016, giving insurers more time to adapt to the changes.

Continue Reading “SPOTLIGHT: Mexico’s insurance and surety law” at BN Americas

Catching Early Cashflows

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Posted on 2nd April 2015 by Solvency 2 News in Europe |UK

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Solvency II allows recognition of expected future profits on insurers’ balance sheets, and, as a consequence, some may expect a reduction in value in force monetisation transactions. But they canhuge.96.480759 still be attractive, say Craig Gillespie, Chris Lewis and Scott Mitchell.

Value in force (VIF) monetisation transactions – arrangements that allow insurers to exchange expected future profits for a capital sum today – have been utilised by life insurers for more than 10 years, with recent periods in particular showing ever-higher levels of market activity. Solvency II will focus minds more firmly upon the need to optimise an insurer’s capital, liquidity and risk positions. VIF monetisation is likely to remain one such viable option to help achieve these objectives.

Continue Reading “Catching Early Cashflows” at The Actuary News

UK Financial Regulators set out ‘proportionate’ senior persons rules for Solvency II and non-Solvency II insurers

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Posted on 31st March 2015 by Solvency 2 News in Europe |UK

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Senior staff at smaller insurance firms not subject to the new Solvency II EU-wide regulatory regime will be subject to complementary, but proportionate, regulatory oversight, according to the Financial Conduct Authority (FCA) jstat487331f1_onlineand Prudential Regulation Authority (PRA).

The regulators have published a series of consultation papers setting out their proposed changes to the ‘approved persons’ and ‘senior insurance managers’ regulatory regimes, taking into account new standards of conduct that will be imposed by the EU’s Solvency II Directive once in force next year.

Continue Reading “UK Financial Regulators set out ‘proportionate’ senior persons rules for Solvency II and non-Solvency II insurers” at Out-Law News

Reporting Templates and Calculation made Simpler under Solvency II, says PRA

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Posted on 26th March 2015 by Solvency 2 News in Europe |UK

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Under the final rules implementing the Solvency II directive, the Prudential Regulation Authority (PRA) has simplified matters in two areas.id-0009345512

Paul Fisher, executive director at the PRA, said reporting templates have been amended to improve clarity and calculations on technical provisions have also been made simpler.

Speaking in a webcast published by the Association of British Insurers (ABI), Fisher said: “What we have done is to use our discretion is to try to make things simpler where we can. We’ve done it in a couple of places, particularly around simplifying some of the reporting templates, which the firms have found a little complicated.

Continue Reading “Reporting Templates and Calculation made Simpler under Solvency II, says PRA” at The Actuary News

PRA publishes final Solvency II rules

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Posted on 20th March 2015 by Solvency 2 News in Europe |UK

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The Prudential Regulation Authority (PRA) has published its final rules setting out how the Solvency II Directive will be implemented in the UK.collections-final-notice

The rules explain how the “long-term guarantees” package will be implemented and how insurers can reduce the risk on long-term liabilities with long-term assets.

The long-term guarantees package means that insurers will be able to reduce their capital and reserve requirements where they are matched and invested for the long term.

A consultation paper has been published on the application process for “volatility adjustment” which is designed to adjust the risk-free discount rate used to value insurance liabilities.

Continue Reading “PRA publishes final Solvency II rules” at Mortgage Solutions News

Bank of England says will apply new insurance rules ‘proportionately’

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Posted on 20th March 2015 by Solvency 2 News in UK

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Reuters) – The Bank of England said on Friday that it would apply new European Union insurance regulations “proportionately”, following industry fears that the central bank might seek to add extra rules for companies based Bank-Of-England_1218220cin Britain.

The so-called Solvency II rules, which take effect in 2016, aim to ensure that insurers such as Britain’s Prudential (PRU.L) and Aviva (AV.L) hold enough capital to honour policyholder commitments even when markets turn sour.

In a statement on Friday about how he intended to police the rules, BoE Deputy Governor Andrew Bailey said the British insurance industry already managed risks in the way the rules intended, unlike elsewhere in Europe.

Continue Reading “Bank of England says will apply new insurance rules ‘proportionately'” at Reuters News

Wave of new regulation to impact on insurers as industry leaders point to…

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Posted on 19th March 2015 by Solvency 2 News in Europe |UK

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Insurers must prepare for a wave of new regulation over the next year and at the same time look at how best to serve consumers in an increasingly digitised way, industry leaders and legal experts have said.ocean_waves_wallpaper_8

Speaking at an industry forum on the future of general insurance distribution organised by Pinsent Masons, the law firm behind Out-Law.com, assistant director of the Association of British Insurers (ABI) Jonathan de Beer identified the Solvency II reforms as a particular challenge that UK insurers will need to address.

Some would describe the EU’s Solvency II framework as “a monster” and there was a concern it has been “over-engineered”, de Beer said, referring to the length of the new legislation and the fact that it has been approximately 15 years in the making.

Continue Reading this story at Out-Law News

Norway’s Storebrand Buys Real Estate, Mortgages to Escape Negative Yields

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Posted on 17th March 2015 by Solvency 2 News in Europe

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Plunging rates on government bonds in Europe are forcing life insurance companies to seek out other asset classes as they must meet obligations on guaranteed insurance policies. Almost half of Storebrand’s asset allocation for Lake_Bondhus_Norway_2862guaranteed policies in Norway is invested in hold-to-maturity bonds. As bonds mature, the Oslo-based company must reinvest while finding returns high enough to cover guaranteed rates.

Storebrand, which has 535 billion kroner ($65 billion) under management, has about 11 percent of its customer portfolios, with rate guarantee in Norway, invested in real estate. The average return on real estate in Norway is about 4.8 percent, according to Grefstad. While the company invests in mortgage and corporate bonds mostly from Norwegian and Swedish issuers, it also looks for opportunities from other European issuers that sell in the Norwegian or Swedish currencies.

Continue Reading “Norway’s Storebrand Buys Real Estate, Mortgages to Escape Negative Yields” at Insurance Journal News

German pension fund association vows to keep fighting HBS

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Posted on 17th March 2015 by Solvency 2 News in Europe

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The German pensions industry has issued a “clear rejection” of any attempt to standardise solvency requirements across European pension funds, according to Joachim Schwind, chairman of the German Hoechst PensionskasseiStock_000009351815Small and board member at German pension fund association Aba.

At this week’s Handelsblatt occupational pensions conference in Berlin, he pointed out that the holistic balance sheet (HBS) approach was “really a Solvency II concept with additional regulation for occupational pensions”.

As such, he said it was highly complex and increased costs without taking sponsor support into account.

Continue Reading “German pension fund association vows to keep fighting HBS ” at IPE News