According to the Solvency II legislative framework the ultimate forward rate shall be stable over time and shall only change as a result of changes in long-term expectations. The methodology to derive the ultimate forward rate shall be clearly specified and be determined in a transparent, prudent, reliable and objective manner that is consistent over time.
Furthermore, the ultimate forward rate shall take account of expectations of the long-term real interest rate and of expected inflation.
The main objective of Solvency II is the protection of policyholders. To achieve that objective, the UFR needs to be chosen appropriately.
The proposed UFR methodology strives for a balance between the stability of the UFR and the need to adjust the UFR in case of change in long-term expectations about interest rates and inflation.
Continue Reading “The European Insurance and Occupational Pensions Authority (EIOPA) published… ” at Actuarial Post News
Solvency II is making a splash in Europe, with EU-based insurers riding the latest wave of regulation. Only time will tell how its arrival in the EU will impact life insurance companies.
On 1 January 2016, Solvency II finally landed and became the key regulatory framework for EU-based insurers and their subsidiaries. This article considers how international or ‘offshore’ life insurance companies are affected by Solvency II, now and in the future.
Advances with insurance and reinsurance regulatory frameworks in China and India are reforming both countries’ reinsurance markets, a move that could provide global reinsurers and insurance-linked securities (ILS) players with ample opportunity to access new peril regions.
During 2015 both China and India made significant steps towards improving their domestic insurance and reinsurance industries, seeking to expand the number of reinsurance entities that write business on their shores and improve the security and solvency of their re/insurance markets and players.
“A number of regulatory actions in Asia are changing the market landscape. Key regions like China and India are seeing reform implemented that will likely bring new market players and potentially create reinsurance supported opportunities for insurers in the market,” says reinsurance broker Aon Benfield in its latest reinsurance market outlook report.
Continue Reading “Regulatory Advances Create Reinsurance And ILS Opportunities In Asia” at Seeking Alpha News
The European Insurance and Occupational Pensions Authority (EIOPA) has published a consultation paper on the European Commission’s “… request to EIOPA for further technical advice on the identification and calibration of other infrastructure investment risk categories i.e. infrastructure corporates“.
This process began in February 2015, when the Commission made its first call for an EIOPA technical advice on infrastructure investments by insurers. On that occasion:
- EIOPA published a consultation version of its draft advice to the Commission in July 2015;
- EIOPA submitted its final advice to the Commission on 29 September 2015 – in particular, EIOPA proposed lower Solvency II capital charges for debt and equity investments in “qualifying infrastructure projects” that were financed using an appropriate SPV structure; and
Continue Reading “Blog: Solvency II: EIOPA Consults On Treatment Of Infrastructure Corporates” at JD Supra Business Advisor
The City is split when it comes to Brexit. Certainly, the larger City institutions with significant EU business tend to side with Remain. However, smaller companies and those with a more global business model are more divided.
The supporters of the EU value the Single Market. They seem to believe that it promotes free trade and reduces regulation: in reality it does neither. The main benefit of the Single Market is that it reduces the costs for large companies of dealing with up to 28 regulatory systems. Meanwhile, smaller companies that do not trade with the EU suffer from the full force of EU regulation.
Whether we are talking about the regulation of securities markets, the fund management industry or the insurance industry – all huge export earners for the UK – responsibility for regulation has become centralised in Brussels.
Continue Reading “Costly EU regulation has not made financial services safer or better – but Brexit is no silver bullet” at City A.M.
Four of Sweden’s largest pension providers have urged the Ministry of Finance to regulate the occupational pension sector with a tailor-made framework rather than subject them to Solvency II.
In the letter sent by Alecta, AMF, Folksam and Folksam’s local government subsidiary KPA at the beginning of April, the four providers outline why the government should consider a new standalone regulatory framework, based on the current traffic-light system for assessing the financial stability of providers, rather than impose the insurance regulation on the sector from 2019.
The framework would formalise the traffic-light system used by regulator Finansinspektionen (FI), which includes stress tests for equity, credit, interest rate, real estate and currency risks, while allowing the providers to maintain their current mark-to-market balance sheets, according to one of the signatories.
Continue Reading “Largest Swedish pension providers call for break from Solvency II” at City A.M.
To mark the presentation of the annual report and the final figures for 2015, UNIQA has also published the Group embedded value, capital ratios and risk position of the past financial year today.
The market-consistent embedded value of the UNIQA Group after minority interests improved by 13.2 per cent to EUR 4,725,3 million in the year under review (2014: EUR 4,174,5 million).
The market-consistent embedded value, which is calculated on the basis of international guidelines, represents the value of the insurance policy portfolio and is composed of the net assets for life, health, property and casualty insurance as well as the current value of future income from the existing life and health insurance portfolio.
The present value in the life and health insurance sector (value of in-force business/VIF) rose by 17.3 per cent to EUR 1,847,1 million (2014: EUR 1,573,8 million).
Continue Reading “UNIQA Insurance Group AG / capital ratios and risk position improve -earnings increase” at Uniqa Insurance GRoup
OLDWICK, N.J.–(BUSINESS WIRE)–In this A.M.BestTV episode from The Risk Management Society’s (RIMS) annual meeting in San Diego, CA, Bermuda leaders cite the island’s status as being Solvency II equivalent, along with what they say are higher levels of scrutiny, as reasons why they should not be confused with domiciles that have drawn negative attention.
Click on http://www.ambest.com/v.asp?v=rims4416nc to view the entire program. “The insurance industry is the foundation of the Bermuda economy,” said Michael Dunkley, premier, Bermuda.
“Bermuda has worked very hard to be in that position, and through a close partnership with governments, current and past, members of the industry and Bermuda’s regulators, I think the country has created a unique environment where all work together in a very competitive environment to keep Bermuda in the forefront.”
Continue Reading “A.M. Best “TV at RIMS: Bermuda Leaders Say Differences Matter Among Offshore Domiciles” at A.M. Best News
The benefits of streamlining and automating actuarial processes are evident in this recent case study, as Joel Fox explains.
Much is made of the possibilities of technology to “industrialise” actuarial processes that are time consuming and labour intensive, but what gains are achievable in real life?
Willis Towers Watson recently demonstrated how its Solution for Life suite of software, technology and consulting services was able to bring a host of benefits to the Solvency II production schedule of a with-profits fund.
Solvency II is challenging actuarial teams to produce results faster than ever, in the face of commercial pressures and the need to reduce operational risk. In response to these challenges, Willis Towers Watson developed tools and techniques that have, in this case study, cut by two-thirds the time required to produce the results and reports – and with half the resource.
Continue Reading “The reality of industrialisation” at Insurance ERM News
There’s a buying opportunity at UK listed assurance and savings group Legal & General thanks to market concerns that have pushed its share price lower.
The group had a strong year in 2015, with divisional operating profit rising by about 15 per cent.
L&G, which is leveraged to savings growth in the UK, also upped dividends by 19 per cent.
But while the headline numbers were solid, investor focus is on new Solvency II capital requirements.
There has also been disquiet about the company’s exposure to “weak” sectors, such as resources, in the annuity bond portfolio.
Continue Reading “Legal & General’s overblown market sell-off presents buying opportunity” at Financial Review