The European Insurance and Occupational Pensions Authority will not recommend lower capital charges for financing infrastructure projects.
(April 10, 2014) — The European insurance and pensions regulator has ruled out recommending lower risk charges for infrastructure project finance.
The move by the European Insurance and Occupational Pensions Authority (EIOPA) has dealt a blow to investors’ hopes that infrastructure might carry a lower risk rating under Solvency II.
EIOPA Chairman Gabriel Bernardino wrote in a newsletter yesterday that despite evidence of the risk profile for infrastructure assets improving over time, the body had concluded lower risk charges for infrastructure project finance could not be recommended.
Continue Reading “ Capital Adequacy Blow for Infrastructure Projects ” at AICIO News
A draft of the Solvency II delegated acts circulated informally within the industry suggests the last liquid point for non-euro currencies could shift, making it harder for insurers to hedge long-term liabilities
Inconsistencies in the latest draft of the Solvency II delegated acts threaten to undermine how insurers value their long-term liabilities in currencies other than the euro.
Proposed changes by the European Commission could make it harder for insurers to hedge against movements in the risk-free rate curve used to discount non-euro liabilities.
The latest draft of the delegated acts, which set some of the detail for Europe’s Solvency II insurance regulation and were circulated informally to insurers on March 14, defines the technique by which the last liquid point (LLP) should be set for the euro.
Continue Reading “Solvency II Proposals Cause Confusion on Non-euro Extrapolation” at Risk News
David Riley, head of office at Marsh Management Services Guernsey Limited and chairman of the Guernsey International Insurance Association Regulatory & Technical Committee, discusses the proposed changes to Guernsey’s solvency regime.
Guernsey as a domicile offers a full range of captive solutions. It was the innovator of the PCC structure and the more recent ICC structure. The benefits of domiciling in Guernsey are clear; however, as the global captive space develops increasing standards as a result of regulation, changes to Guernsey’s regime will become necessary to remain a world leader in this space. Recently the Guernsey Financial Services Commission (GFSC) has sought to make a number of changes to the Guernsey solvency regime, which is a good example of regulatory consultation with the industry. The process started in early 2012 with a GFSC discussion document concerning a move toward risk-based solvency. This recognised the fact that Guernsey has previously announced intentions not to apply for Solvency II equivalence, a decision which has been fully supported by the industry.
Continue Reading “Guernsey: Guernsey’s Solvency Regime – It’s Good To Talk” at Mondaq News
The EU parliament finally approved the Omnibus II Directive on March 11 2014, which effectively brings Solvency II into force from January 2016. Many insurers slowed down their Solvency II programmes when there was uncertainty over the final implementation date. Pillar 3 reporting now requires focus because it was often put on hold during the uncertainty. Now, insurers need to react and make progress on Pillar 3 reporting.
Most insurers have Q3 2015 targets to hit EIOPA guidelines but larger insurers and the Lloyds of London market (dry-run required for Q3 2014) have accelerated deadlines. It is clear that 2014 is the time to work on Pillar 3 ahead of full implementation next year.
Why should actuaries be interested?
Actuarially estimated numbers in the Pillar 3 reports are some of the most material. These must be reported accurately and actuaries have a leading role in ensuring this. As would be expected, actuaries understand Solvency II liability requirements better than their IT colleagues and need to provide actuarial input into the Pillar 3 project for it to be successful.
Continue Reading “Solvency II Pillar 3 – Unravelling the Technology” at Actuarial Post
Ever since Congress last renewed the program in 2007, I’ve expected that reauthorizing the Terrorism Risk Insurance Act (TRIA) would dominate Washington’s insurance debate in late 2014. I’m not so sure any more. In fact, another issue—Solvency II—seems likely to distract a lot of the insurance lobbyists and committees through the rest of 2014.
Although many members of Congress would probably just as soon let the TRIA program lapse, I expect that Congress will end up playing “kick the can” and renewing it for a year or two with only modest changes. Quite simply, the program’s proponents are well-organized and motivated, while its many detractors are not. In the end, I’m willing to bet that leadership in both the House and the Senate quietly round up the bare minimum of votes for a one- or two year renewal, rather than trying to reform it or letting the program lapse.
Continue Reading “Solvency II, Not TRIA, Shaping Up as Year’s Hottest Debate” at Insurance Journal News
Insurance Europe president Sergio Balbinot, writing in the Financial Times, said that the ‘delegated acts’ currently being drawn up by regulators under the Solvency II regime “deviate[s] from the intention” of legislators. He said that differences in the treatment of long-term guarantees and third-country equivalence in particular could have “negative consequences” for the industry.
“If not corrected, the Delegated Acts would seriously limit insurers’ ability to provide the long-term investment and stability Europe’s economies need,” Balbinot said. “They would have a major impact on the availability and price of insurance products, and would harm the ability of European insurers to compete internationally.”
Continue Reading “New EU Insurance Rules Moving Away from What Legislators Intended, industry warns” at Out-Law News
Today’s vote by the European Parliament is a significant step towards implementing Solvency II and ensures the long-delayed regulatory regime for insurers is on track to take effect at the start of 2016, Fitch Ratings says. There are still several elements to be finalised, which could have a significant impact on capital levels, but we expect these to be agreed in time for implementation.
We understand that earlier industry concerns about the Solvency II treatment of long-term guarantee business, including annuities, have largely receded based on the latest draft of the rules. Legal & General is one of the insurers that stood to be most affected, given its sizable proportion of annuity business.
Continue Reading “RPT-Fitch: EU Parliament Vote Ensures Solvency II On Track For 2016″ at Reuters News
At the National Association of Pension Funds’ (NAPF’s) conference in Edinburgh, 64% of attendees of a session on regulatory risks said that the proposal, abandoned by the European Commission last year, remained their top worry. Financial News, which reported on the session, said that the ongoing implementation of the European Markets Infrastructure Regulation (EMIR) was the second biggest worry, voted for by 28% of session attendees.
The Commission had previously proposed the introduction of more stringent solvency requirements for pension providers as part of its reform of the Institutions for Occupational Retirement Provision (IORP) Directive. That new system should, it had said, be compatible with the solvency requirements due to come into force for insurers from 2016 under the Solvency II regime “to the extent necessary and possible”.
Continue Reading “Possibility of EU Solvency Rules Still a Threat, according to Pension Funds” at Out-Law News
In late January 2014, Brazil applied for Solvency II equivalence for its insurance solvency regime. Its regulator, Superintendência de Seguros Privados (SUSEP), is currently negotiating an agreement with EIOPA in order to evaluate the extent to which Brazil’s insurance legislation complies with the upcoming Solvency II rules. After what was a less than positive outlook on Solvency II, Brazil now appears to be very optimistic that its supervisory model will receive equivalence status under Solvency II.
It is unclear however what type of equivalence Brazil will be applying for; whether it be equivalence for the group capital calculation, for group supervision equivalence, or for reinsurance equivalence.
Continue Reading “Brazil U-Turn on Solvency II Equivalence” at Insure Reinsure News