WHAT is risk-based capital (RBC)? On its website, the United States’s National Association of Insurance Commissioners (NAIC) defines it as “a method of measuring the minimum amount of capital appropriate for a reporting entity to support its overall business operations in consideration of its size and risk profile.”
“RBC limits the amount of risk a company can take. It requires a company with a higher amount of risk to hold a higher amount of capital. Capital provides a cushion to a company against insolvency. RBC is intended to be a minimum regulatory capital standard and not necessarily the full amount of capital that an insurer would want to hold to meet its safety and competitive objectives,” NAIC explains.
Continue Reading “Risk-based Capital for Insurers” at Business Mirror News
Gibraltar’s financial regulator, the Financial Services Commission (FSC), has finalized and published its guidelines for insurance-linked securities (ILS) following a consultation process with input from ILS experts from around the world.
Gibraltar, like many other domiciles, is readying its regulatory environment to be able to act as a domicile and host to insurance-linked securities (ILS) business, such as catastrophe bonds and collateralized reinsurance.
HM Government of Gibraltar, with the support and participation of ILS experts from around the world, established a working group that has been providing industry expertise and feedback over recent months as the ILS Guidelines were finalised.
Continue Reading “Gibraltar Finalises, Publishes Insurance-linked Securities (ILS) Guidelines” at Artemis News
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today announced the launch of a dedicated Solvency II Data Service available through Thomson Reuters DataScope Select.
The solution is designed to help insurers, asset managers, fund administers and custodians meet capital adequacy and disclosure obligations under Solvency II.
Solvency II requirements are placing added pressure on institutions to have a deeper understanding of their current and future trading and investment risk exposure. Thomson Reuters Solvency II Data Service provides clients with the key data sets needed to power their capital adequacy, disclosure tools and workflows.
Continue Reading “Thomson Reuters Launches Dedicated Solvency II Data Service” at Finextra News
The German government’s final draft of the new insurance supervision law (VAG) will impose elements of Solvency II on the country’s Pensionskassen and Pensionsfonds, despite objections by industry and employer bodies.
The VAG had to be amended to fulfil requirements under Solvency II but occupational pension groups lamented that the insurance framework was, in part, being transferred onto schemes.
The German pension fund association aba told IPE it had not yet had the chance to check the new draft in detail but at first glance it seemed that “unfortunately” a lot of its requests for amendments, made after the first draft was published in late July, went unheeded.
Continue Reading “Germany to Impose Solvency II Measures on Local Pension Funds” at Investments and Pension Europe News
Firms planning to create their own methods of managing compliance with the upcoming new regulatory regime for European insurers will not be able to use additional capital held against their day to day liabilities to meet longer-term risks, the Prudential Regulation Authority (PRA) has said.
The UK’s insurance regulator has published an update aimed at those firms intending to apply to use an ‘internal model’ under the new Solvency II regime (2-page / 164KB PDF), which is due to come into force in January 2016. The update is intended to clarify the relationship between the risk margin and calibration of non-hedgeable risks, and the PRA’s position on assessing risk for matching adjustment portfolios, taking into account the consultation paper published by the regulator since its July 2014 update.
The Solvency II regime sets out broader risk management requirements for European insurers and dictates how much capital firms must hold in relation to their liabilities. The legislation was originally scheduled to come into force in 2012; however the Omnibus II Directive, which completed and finalised the new framework, was only approved by the European legislative authorities earlier this year.
Continue Reading ” PRA Clarifies Capital Requirements for Insurers Planning to Use Internal Models for Solvency II Compliance” at Out-Law News
LONDON, Aug 22 (IFR) – Hefty capital charges on subordinated securitisation tranches proposed in the latest draft of Solvency 2 will blunt insurers’ appetite for the asset class, market participants warned this week.
Under planned rules set to be published in September by the European Commission, while insurance companies will not be heavily penalised to hold the most senior tranche of an ABS deal, lower ones will be hit by much heftier capital charges.
“Who’s going to invest the resources necessary to do sophisticated analysis to buy securitisations if they think they will be heavily penalised by capital charges?” said Steve Gandy, head of DCM solutions at Santander Global Banking and Markets.
Continue Reading ” Solvency 2 Draft Risks Clashing with Banks’ needs and HQS Definition” at Reuters News