Insurers ‘uncertain’ about Solvency II Implementation, says KPMG

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Posted on 18th September 2014 by Solvency 2 News in Europe |UK

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Its report, Public reporting in a Solvency II environment, published today, KPMG found firms fear that guidance or regulator positions could change ahead of the capital rules implementation and are keen to avoid disclosing either too muchLive life for the moment because everything else is uncertain or too little information as a result.

KPMG’s report looked at 11 multinational insurance companies in the UK and continental Europe. It stated that: ‘Firms are increasingly considering what SII disclosures are needed before SII implementation so they can manage expectations and educate the investor and analyst community.

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Europe’s Insurance Run-off Market ‘grew by €7bn’

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Posted on 16th September 2014 by Solvency 2 News in Europe |UK

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Its annual survey on discontinued insurance business revealed that the European run-off market was now worth €242bn, up from €235bn in 2013. Based on the responses of 200 organisations, PwC found that a majority of this increase infilt_runoff_hvyraincame from German and Swiss run-off books.

The consultants’ Unlocking value in run-off survey predicted that run-off transactions would peak during the coming year as Solvency II drove a renewed focus in core business and led to organisations deciding to exit non-core lines.

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Risk-based Capital for Insurers

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Posted on 16th September 2014 by Solvency 2 News in Europe |UK |USA

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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 change stacking upsupport 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.

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Gibraltar Finalises, Publishes Insurance-linked Securities (ILS) Guidelines

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Posted on 15th September 2014 by Solvency 2 News in Europe |UK

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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.Capital_Markets

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.

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UK Gets Key EU Portfolio for Insurance and Pension Regulation

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Posted on 10th September 2014 by Solvency 2 News in Europe |UK

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UK politician Lord Hill is set to be handed a senior economic post in Brussels, which will include responsibility for the new Solvency II regulations for the insurance industry, by European Commission President-elect Jean-Claude Juncker.Golden key in keyhole

Lord Hill will take up the newly created post of commissioner for financial stability, financial services and capital markets union once the make-up of Juncker’s commission is approved by the European Parliament.

The portfolio has been created after the decision to break up the existing internal market department of the commission, headed by French commissioner Michel Barnier, and move responsibility for financial regulation.

Lord Hill will therefore be responsible for the European supervisory authorises, including EIOPA (European System of Financial Supervision), the regulator for insurance and pensions.

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Thomson Reuters Launches Dedicated Solvency II Data Service

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Posted on 8th September 2014 by Solvency 2 News in Europe |UK

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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.T1-data-service-providers

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.

 

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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.

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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.

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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.

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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.

 

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