Complex reporting caused by Solvency II risks putting investors off insurance sector

LONDON, Tuesday 25 April, 2017 — The insurance sector is at risk of being further marginalised by investors as performance reporting becomes more complicated as a result of Solvency II, according to a report published jointly by Autonomous Research and Willis Towers Watson. Based on the analysis of the reporting statements of 31 European insurers, the report finds Solvency II has forced apart the sector’s accounting and solvency reporting, making it harder for investors to have a clear picture of how individual insurers are performing.

The report finds that Solvency II falls significantly short as a profit performance and cash generation metric that can replace embedded value (EV). The urgency of this issue is further underlined by the rapidly shrinking publication of useful EV data in Europe and the fact that the reformation of IFRS (new proposals expected to be published in May) is unlikely to help for many years. Continue reading Complex reporting caused by Solvency II risks putting investors off insurance sector

EIOPA proposes amendments to the adopted Solvency II Technical Standards on Reporting and Disclosure

The European Insurance and Occupational Pensions Authority (EIOPA) has identified some required amendments to the Implementing Technical Standard on the templates for the submission of information to the supervisory authorities (ITS on Reporting) and in the Implementing Technical Standard with regard to the procedures, formats and templates of the solvency and financial condition report (ITS on Disclosure).
As a result, these amendments concern the Implementing Technical Standards, the Guidelines on Reporting for Financial Stability Purposes and the Guidelines on the Supervision of Branches of Third-Country Insurance Undertakings.

Some of the amendments have an impact on the Solvency II XBRL Taxonomy, namely the governance of Taxonomy releases.

It is of utmost importance that the release of the Taxonomy planned for July 2017 and the legal basis are fully aligned.

Read more at: http://bit.ly/2oFmEPp

Bermuda: Changes to Bermuda Solvency Capital Requirement Postponed

In the light of concerns raised in industry feedback, the Bermuda Monetary Authority (BMA) has decided to postpone the introduction of various adjustments to the Bermuda Solvency Capital Requirement (BSCR) standard formula that were proposed in its November 2016 Consultation Paper.

The adjustments were originally scheduled to be field-tested in 2017 with a view to their implementation for year-end filings for financial years beginning on or after 1 January 2017. They will now be introduced for year-end filings for financial years beginning on or after 1 January 2018. There will then be a three-year grade-in period.

The BMA considers that the adjustments are necessary to bring the BSCR into line with international standards. The adjust­ments include the following:

Read “Bermuda: Changes to Bermuda Solvency Capital Requirement Postponed” at Mondaq News

StoreBrand: Conservative Scenario Gives Up To 20% Upside Potential

StoreBrand (OTCPK:SREDY) is a leading insurance company in the Nordic market which has been under a restructuring program over the past few years. It has taken decisive measures to lower balance sheet risk and reduce its dependence on guaranteed products.

This has improved the company’s business profile and capitalization, enabling it to resume dividend payments recently. However, its valuation is still at a deep discount to that of its closest peers, and a re-rating seems warranted, giving StoreBrand plenty of upside potential. The StoreBrand Group is a leading insurance company in the Nordic market, especially concerning long-term savings and insurance.

It is based in Oslo, Norway, and was founded in 1767. The company has about 1700 employees and a total of 1.9 million customers in its domestic market and Sweden. It has a market capitalization of about $3 billion and trades in the U.S. on the over-the-counter market.

Continue Reading “StoreBrand: Conservative Scenario Gives Up To 20% Upside Potential” at Seeking Alpha Pro

EDHEC: Solvency II Prudential Regulation – An Impediment To The Return Of Insurers To The Property Market

In a position paper entitled “The Impact of Solvency II Prudential Regulation on Property Financing in the Insurance Industry”, the Financial Analysis and Accounting Research Centre and the Economics Research Centre at EDHEC Business School conduct a critical analysis of the calibration of property risk under Solvency II prudential regulation.

This study, conducted in partnership with the French Ministry for Housing, tests the robustness of the calculations for two key elements within the Solvency II calibration – the size of the property shock (Value-at-Risk) and the correlation of real estate with other asset classes.

The challenge of this analysis is sizeable given that the European insurance sector currently has €10 trillion worth of outstanding investments. 

Continue Reading “EDHEC: Solvency II Prudential Regulation – An Impediment To The Return Of Insurers To The Property Market” at Mondo Visione

European growth, regulatory changes drive asset moves

The recovery of the European economy — combined with moves by regulators to free up potential sources of return — is leading to a paradigm shift in asset allocation. But conflicting regulatory regimes could curtail some of the opportunity, sources said.

European pension funds’ investing patterns are beginning to change, thanks to a lifting of asset allocation restrictions across the Continent that is coinciding with the long-awaited recovery in the European economy and a changing global interest rate environment.

The global financial crisis left asset owners in Europe with no appetite for more volatile asset classes.

And European pension funds historically were heavily invested in fixed-income instruments.

Continue Reading “European growth, regulatory changes drive asset moves” at Pensions & Investments

Moody’s: Solvency II regulatory disclosures unlikely to affect European insurers’ credit quality

Creditworthiness of European rated insurers is unlikely to be affected when they will have to reveal, for the first time starting in May 2017, the extent to which their Solvency II ratios are enhanced by various measures, including transitionals and long-term guarantee measures, says Moody’s Investors Service in a report published today. The disclosures are part of insurers’ compliance reporting under the new capital regime.

Moody’s report, “Insurers — Europe: New Solvency II disclosure to provide insight, but unlikely to change our credit view,” is available on www.moodys.com. Moody’s subscribers can access this report via the link provided at the end of this press release. The rating agency’s report is an update to the markets and does not constitute a rating action.

Continued Reading “Moody’s: Solvency II regulatory disclosures unlikely to affect European insurers’ credit quality” at EconoTimes

Moody’s assigns Ba2(hyb) rating to RSA’s SEK2.5 billion/DKK650 million perpetual contingent convertible notes

London, 24 March 2017 — Moody’s Investors Service has today assigned a Ba2(hyb) rating to the SEK2.5 billion/DKK650 million perpetual restricted Tier 1 contingent convertible notes (“notes”) to be issued by RSA Insurance Group plc (“RSA” or “Group”; backed subordinated rating Baa1(hyb), stable outlook).

Moody’s approach to rating “high trigger” contingent capital securities is described in its Global insurance rating methodologies (Global Property and Casualty Insurers: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_190302).

The notes rank junior to RSA’s senior creditors (including Tier 2 capital) and existing preference shares, but they rank senior to common shares. Coupons may be cancelled on a non-cumulative basis at the issuer’s option and on a mandatory basis if the Group’s solvency capital requirement is breached.

Continue Reading “Moody’s assigns Ba2(hyb) rating to RSA’s SEK2.5 billion/DKK650 million perpetual contingent convertible notes” at Moody’s

British regulator to focus more on protecting insurance policyholders

LONDON, March 20 (Reuters) – The Bank of England said it
will devote greater effort to ensuring more consistent
protection for those who would suffer most if their insurance
policies do not pay out as promised. The move follows a review by the central bank’s Independent Evaluation Office (IEO), published on Monday, which looked into
how the BoE’s supervisory arm, the Prudential Regulation Authority (PRA), ensures that policyholders are properly protected. PRA work on the issue had been “crowded out” by “live supervisory issues” and the need to implement European Union capital rules known as Solvency II by January 2016, the IEO said in its report. The PRA’s “articulation of its policyholder protection responsibilities appears to be unfinished business”, although there was no evidence that PRA supervisors were falling short of their duties, the IEO said.

BoE Deputy Governor and PRA Chief Executive, Sam Woods, said the PRA does not seek to protect all policyholders equally and will direct more resources to those who would suffer greater financial hardship if their policies do not pay out as promised.

Continue Reading “British regulator to focus more on protecting insurance policyholders” at Nasdaq News

NAIC asks Treasury secretary to review EU-US covered agreement

The National Association of Insurance Commissioners has asked the new Treasury secretary to clarify provisions of the covered agreement reached between the United States and the European Union in response to the bloc’s Solvency II directive. 

The covered agreement deal negotiated by the U.S. Department of the Treasury under the Obama administration and the Office of the U.S. Trade Representative, announced on Jan. 13, aims to address the fact that the European Commission has not deemed the United States an equivalent jurisdiction, per the EU’s Solvency II directive outlining a risk-based capital regime for insurers and reinsurers in Europe.

Continue Reading “NAIC asks Treasury secretary to review EU-US covered agreement” at Business Insurance News

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