Germany to Impose Solvency II Measures on Local Pension Funds

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Posted on 5th September 2014 by Solvency 2 News in Europe |UK

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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. Pension cookies

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

PRA Clarifies Capital Requirements for Insurers Planning to Use Internal Models for Solvency II Compliance

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Posted on 3rd September 2014 by Solvency 2 News in Europe |UK

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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, lecturethe 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

Insurers Issue Solvency II Investment Warning

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Posted on 1st September 2014 by Solvency 2 News in Europe |UK

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The insurance industry’s total investment portfolio across Europe grew to about €8.5 trillion last year, according to an industry federation, but it warned Solvency II could undermine long-term backingwarning-icon-1105202344 firms can provide.

Today’s Key facts booklet, published by Insurance Europe, found the industry investments had grown by 3.2% compared to 2012, based on constant exchange rates.

But with new capital rules coming into force in January 1 2016 as part of the Solvency II reforms, the group warned this could make it more expensive for insurers to invest in long-term government and corporate backed-bonds, as well as infrastructure projects. This is because the new regulatory regime will require increased levels of capital to be held against long-term investments.

Continue Reading “Insurers Issue Solvency II Investment Warning” at The Actuary News

Solvency 2 Draft Risks Clashing with Banks’ needs and HQS Definition

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Posted on 22nd August 2014 by Solvency 2 News in Europe |UK

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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.4201-50500

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

Solvency II. What can insurance learn from banking?

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Posted on 20th August 2014 by Solvency 2 News in Europe |UK

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As the regulators begin to target insurers how will their IT systems cope with new demands? Mark Holland, founding director of Holley Holland, explains how the industry can benefit from looking at the recent experience of banks.banking1

Around ten years ago, the regulators decided they needed to control the banks’ capital ratios. Since then, the banking sector has been subject to increasing regulation and big changes in the regulating bodies such as the split of the former FSA.

Now it’s the insurance industry’s turn. A similar wave is coming its way; beginning with the implementation of Solvency II.

Continue Reading “Solvency II. What can insurance learn from banking?” at FX-MM News

UK Treasury Consults on Final Solvency II Implementation Measures

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Posted on 14th August 2014 by Solvency 2 News in Europe |UK

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The UK Treasury is seeking views from the insurance industry on the final provisions through which it will incorporate new EU-wide solvency and risk management rules into national law.uk-treasury-tax-avoidance.si

The short consultation, which will close on 19 September 2014, sets out the UK’s proposed approach to the ‘volatility adjustment’, which is intended to protect insurers with long-term insurance products from artificial fluctuations in volatility; and to removing firms’ regulatory permissions if they do not meet minimum capital requirements under the new rules. The consultation was due to take place in 2011, but was held back pending EU authorities’ delayed final approval of the new regime. The new EU directive came into force in May of this year and EU countries usually have two years to transpose directives into national law.

Continue Reading “UK Treasury Consults on Final Solvency II Implementation Measures” at Out-Law News

EU Commission to Ease Solvency II Charges in September Proposal

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Posted on 13th August 2014 by Solvency 2 News in Europe |UK

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LONDON, Aug 13 (IFR) – The European Commission has lowered capital charges for insurers and pension funds investing in securitisation making it less punitive for them to hold the asset-class, according to a final draft circulated amongabda79fa-bc40-11e3-_563482c member states.

The EU’s main authority is set to publish proposals implementing capital requirements for the sector, under Solvency II, by the end of September. Co-legislators from the European Parliament and the Council of EU states will then have a maximum six months to either approve or reject them in full.

Continue Reading “EU Commission to Ease Solvency II Charges in September Proposal” at Reuters News

Solvency II: Small Insurers ‘could cut costs by outsourcing actuaries’

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Posted on 4th August 2014 by Solvency 2 News in Europe |UK

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Many UK-based general insurers could benefit from outsourcing their actuarial function as they prepare for Solvency II to avoid the cost of the extra expertise needed, actuaries and consultants OAC has retained-searchsaid.
The European Union’s upcoming Solvency II capital rules require all insurers to have an actuarial capability to help them assess their liabilities. However, OAC warned many firms will not have enough assets under management to allow them to meet the cost of the extra regulatory obligations.

Its examination of a sample of 28 firms and found 17 had assets under management – the market value of the firms’ assets – of under £150m.
Continue Reading “Solvency II: Small Insurers ‘could cut costs by outsourcing actuaries’” at The Actuary News

Preparing your AML Programmes for Solvency II’s Higher Capital Requirements

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Posted on 29th July 2014 by Solvency 2 News in Europe |UK

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In a recent interview with:t_106_0

  • Bruce Porteous, Investment Solutions Director, Standard Life Investment
  • René Knapp, Group Chief Actuary, UNIQA Insurance Group
  • Werner Müller, Chief Financial Officer and Chief Risk Officer, Allianz Elementar Versicherung, Austria

Clear Path Analysis tried to get to the bottom of the challenges insurers face in preparing their asset liability management programmes for Solvency II’s higher capital requirements with some interesting replies…

What fresh challenges should insurers be prioritising solutions for and why?

Bruce Porteous: There are a number of challenges coming through given that Solvency II implementation is not far off. One of the biggest, though, is developing asset strategies and mixes to ensure that, under the new Solvency II regime, assets are as optimal as they can be. There are new assets receiving preferential treatment through things such as the matching adjustment; largely infrastructure, commercial mortgages and also multi-asset funds designed to be optimal, from a capital point of view, under Solvency II. In summary there is substantial work just on the assets side and sourcing some of these assets is equally going to be quite tricky.

Continue Reading “Preparing your AML Programmes for Solvency II’s Higher Capital Requirements” at Total Asset News

Captive Insurers Stick with E.U. Domiciles Despite Impending Solvency II Rules

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Posted on 20th July 2014 by Solvency 2 News in Europe |UK

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Captive insurers are making good progress in preparing for Solvency II and are defying predictions that they would leave the European Union for domiciles where the risk-based capital rules will not apply.paper-dollies

Solvency II, the European Union-wide risk-based capital rules for insurance and reinsurance companies that will come into force in January 2016, will be applied to captives using the “principle of proportionality” to take into account the relative size and complexity of captives.

That proportionality likely will mean that national regulators would impose lighter reporting requirements on captives than on commercial insurance companies, for example, said Gerry Connell, vice president of Marsh Management Services (Dublin) Ltd.

Continue Reading “Captive Insurers Stick with E.U. Domiciles Despite Impending Solvency II Rules” at Business Insurance News