The introduction of new European Union rules forcing insurers to hold enough capital to protect policyholders has gone well though some tweaks will be needed, Britain’s top insurance regulator said on Wednesday.
The EU’s Solvency II rules came into force this month, the result of many years of policy making and expensive preparations for insurers.
There has been concern among regulators about potential volatility in insurance company shares as investors compare the solvency capital ratio (SCR), a new core benchmark of health, that insurers now have to publish.
“It’s so far, so good. It’s been smooth so far,” Sam Woods, executive director for insurance supervision at the Bank of England’s Prudential Regulation Authority told Reuters on the sidelines of an industry event.
Continue Reading “BoE insurance supervisor says EU capital rules off to smooth start” at Reuters News
Enterprise risk management (ERM) practices among European insurers have improved in the build up to Solvency II, but firms must look beyond compliance to make further gains, Standard & Poor’s (S&P) has warned.
The rating agency released updated ERM scores for re/insurers in Europe, the Middle East and Africa (EMEA), and noted an increase in the number of insurers with ‘strong’ or ‘very strong’ ERM practices, compared with 2013.
Although Solvency II has driven a broad improvement in ERM across the European industry, S&P noted that economically inconsistent elements of the framework, such as the volatility adjustment and the ultimate forward rate, could limit ERM development if insurers are motivated by compliance rather than best practice.
Continue Reading “ERM progression limited by uneconomic principles of Solvency II” at Insurance ERM News
Insurers could be forgiven for thinking they are having a bad dream – the one where you are taking an exam, only to find when you turn over the paper that you’ve studied the wrong subject. In this case, the paper would be marked Solvency II, but examiners would have moved on to asking about insurers and systemic risk.
With timing that has left many in the industry dumbfounded, the European Systemic Risk Board (ESRB) published a report in December – just weeks before the implementation deadline for Europe’s new directive – saying insurers contribute to systemic risk through pro-cyclical investment behaviour, and that something should be done about it.
The ESRB’s idea is to introduce a counter-cyclical buffer, similar to the measures in place for European banks. The buffer would load additional capital requirements on firms in good markets and release some of the pressure in periods of stress. The ESRB thinks a buffer would stop insurers herding into riskier assets in bull markets and dumping them when prices fall.
Continue Reading “Insurers should prep for questions on pro-cyclicality” at Risk.net
After quite a volatile 2015 and a significant sell-off in December, we are rather optimistic on the outlook for financial equities in 2016, even seeing potential for double digit returns.
- Double digit return potential for financial equities in 2016
- Life insurers and digital finance are attractive areas
- Blockchain is not disruptive, but will separate winners from losers
Our basis macro-economic scenario for 2016 is one of moderate global growth and low inflation. We don’t expect very high growth numbers in neither developed nor emerging markets. US economic growth will be reasonable, with the Fed gradually hiking interest rates and long-term rates showing perhaps an even more modest increase.
Continue Reading “2016: about blockchain, Solvency II and double digits” at Robeco News
Advanced software updated for innovations in reserving, improved performance and usability
London, Tuesday 19 January, 2016 — Global advisory, broking and solutions company Willis Towers Watson (NASDAQ: WLTW) has released
ResQ 4.0, an updated version of its reserving software for property and casualty (P&C) insurers.
With ResQ 4.0, Willis Towers Watson has concentrated on ensuring the software keeps pace with advancements in computer technology while improving the user experience, particularly around ease of use and efficiency. The principal updates include:
- A 64-bit version of ResQ, in addition to the existing 32-bit version, beneficial for companies with very large ResQ databases and for stochastic analyses with an extensive number of simulations; also provides support for clients wanting to use 64-bit Microsoft Office
- Refreshed user interface providing a more modern look and feel
- The ability to save collections of methods, calculations and data sets as templates, which can then be applied elsewhere within ResQ, aiding efficiency
- New counterparty default cash-flow method, useful for reinsurance bad debt calculations (e.g., for Solvency II) (more…)
Prudential will this week set a benchmark for rivals by becoming the first of the UK insurers to reveal its capital ratio under the new Solvency II rules that came into force at the start of the year.
The Solvency Capital Ratio is a measurement of the amount of capital an insurer has as a proportion of the minimum requirement.
For 2014, Prudential reported a capital ratio of 218 per cent but analysts are expecting a lower number under the new rules.
“I am expecting something in the 180-190 per cent range,” said Barrie Cornes at Panmure. Analysts at Bernstein are also expecting a figure between 180 and 190 per cent, while UBS expects it to be above 180 per cent.
Continue Reading “Prudential to make first move on new capital rules” at Financial Times
PKF is to promote Malta at a conference, fully supported by experienced captive insurance managers and risk management professionals, for a day of world-class networking in New York. The avenue is the prestigious Bar Association building located at 42 West 44th Street in New York, USA.
The main topic of this conference is to see what Malta can offer to US Captives seeking to re-domicile or open up subsidiaries in the EU to tap into their European risks.
One may well ask, with so much competition between EU domiciles, what can Malta offer in the insurance sector which sets it apart from other offshore centres such as the Isle of Man, Channel Islands, Gibraltar and of course the Caribbean stalwarts such as Bermuda, Barbados and Cayman Islands?
Continue Reading “PKF to promote Malta Captives in New York” at Malta Today
Moneyfacts, which started recording the data since 1994, said the reduction in value was driven by low gilts, uncertainty created by pension freedoms, and preparations for the Solvency II directive, which went live earlier this month.
Solvency II has been in the pipeline for over a decade, but Richard Eagling, head of pensions at Moneyfacts, explained delays in the final set of rules and the approval of firms’ internal models, meant that most annuity providers “were not able to fully factor Solvency II requirements into their rates until the final months of the year”.
According to the study, rates “made the worst possible start to 2015”. January saw providers respond to all-time low 15-year gilt yields, leading to the biggest monthly fall that the firm had ever recorded.
Continue Reading “Annuity rates have more than halved since 1994” The Actuary