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

EIOPA publishes final Solvency II equivalence reports – and something else is afoot

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Posted on 11th March 2015 by Solvency 2 News in Bermuda |Europe

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EIOPA has just published its Final Reports and Advice to the European Commission on the Solvency II equivalence of Bermuda, Japan and Switzerland.eiopa-westhafentower-flags

The EIOPA advice in the Final Reports is materially the same as the advice in the Equivalence Consultation Papers. Our earlier blog gives the details, and it’s available here. The Final Reports for Switerland, Bermuda and Japan are available here, here, and here.

In the meantime, something rather more interesting may be about to happen. In our earlier blog, we said that:

There is … a clear expectation that the Commission will decide that:

  • The Swiss and Bermudian systems are equivalent for group capital and group supervision; and…

Continue Reading ” EIOPA publishes final Solvency II equivalence reports – and something else is afoot ” at Lexology News

Uniqa expects Solvency II changes for infrastructure

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Posted on 10th March 2015 by Solvency 2 News in Europe

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Solvency II should take a “more realistic” approach to the treatment of infrastructure investments, said Kurt Svoboda, CFO and CRO at Austrian insurer Uniqa, after the company’s annual results press conference.6a0111684f7606970c01bb0793a6ff970d-800wi

He said the 50% capital requirement on such investments were “relatively high” and “strongly hindered” insurers’ engagement in this area.

“If the EU wants institutional investors to help finance this segment, it needs to offer some support, especially when the investments have economic relevance,” Svoboda said.

Continue Reading “Uniqa expects Solvency II changes for infrastructure” at Real Estate News

Nearly a quarter of insurers may be unprepared for Solvency II reporting requirement

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Posted on 9th March 2015 by Solvency 2 News in Europe

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In a survey of 61 senior insurance executives, 23% of respondents said their firms were not ready for Pillar 3 requirements. Under Solvency II, Pillar 3 requires firms to disclose details of the risks they face, capital adequacy andlendingUnprepared risk management.

The survey, entitled The final hurdle and conducted by business and financial adviser Grant Thornton, said of that 23% of respondents, 5% predicted they would not be ready before the regime comes into effect on 1 January 2016, while 18% were unsure whether they would be prepared in time.

Coontinue Reading “Nearly a quarter of insurers may be unprepared for Solvency II reporting requirement” at TheActuary News

‘Anything is possible’ in SII securitisation charges revamp

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Posted on 6th March 2015 by Solvency 2 News in Europe

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The European Commission (EC) is open to easing the rules for insurers investing in securitised products, as part of the legislative reforms to build a capital markets union (CMU), according to Jonathan Faull, director-general national-security1for financial services at the EC.

Under Solvency II, the senior tranches of safe and transparent securitised products are treated in line with investments in the underlying assets, but junior tranches attract exorbitant capital charges.

In the case of AAA-rated securitisations, a 2.1% charge applies to senior tranches and a 12.5% charge applies to junior tranches.

Continue Reading “‘Anything is possible’ in SII securitisation charges revamp” at Insurance Asset Risk

Large UK insurers should prepare to submit Solvency II matching adjustment applications, expert says

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Posted on 5th March 2015 by Solvency 2 News in UK

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Rabbani Choudhury of Pinsent Masons, the law firm behind Out-Law.com, said that the Prudential Regulation Authority (PRA) would be looking for a “high standard” of evidence from firms that they are eligible for a partial His-Hers-Matching-Couples-Cotton-Pajamas-Sleepwear-Sets_8859_1exemption from the general solvency requirements because some of their assets were not as sensitive to market fluctuations as other assets.

From 1 April, PRA-regulated insurers will be able to apply to use a ‘matching adjustment’ (MA) when calculating their capital requirements under the Solvency II regime, removing the requirement for them to compensate for market volatility that they are not exposed to.

Continue Reading “Large UK insurers should prepare to submit Solvency II matching adjustment applications, expert says” at Out-Law News