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
Puerto Rico’s government said it had “substantial doubt” about its ability to operate long-term, and cited a threat to public services if its Government Development Bank misses debt payments, in a draft of long-delayed fiscal year 2014 financial data released Tuesday.
The 366-page draft, which has not yet been audited, follows criticism from some U.S. lawmakers and financial creditors that Puerto Rico has not been transparent with its finances.
The U.S. territory is mired in economic crisis, facing a 45 percent poverty rate and a dwindling tax base as locals flock to the mainland United States.
Continue Reading “Puerto Rico government cites ‘substantial doubt’ about its solvency” at Reuters News
Good governance and technical expertise will be essential under the new Solvency II regime, says Pilar González de Frutos, president of UNESPA—the Association of Spanish Insurers—and new chairman of FIDES.
She will be making these points in her presentation on the impact of regulation in the Spanish insurance market on day three at FIDES.
“These two features are the ones that will allow insurance undertakings to develop their own internal formulae and, hence, make a more efficient use of their capital,” she said.
She also stresses the importance of a fruitful and constant dialogue between insurance undertakings and the supervisory authorities.
Continue Reading “Solvency II will highlight importance of good governance and technical expertise” at Intelligent Insurer
The adoption of Solvency II-type regulations in Mexico will be positive as risks will be better managed and understood. Reinsurance can also play an important role in offering tailored solutions, said Agnès Bruhat, head of life protection pricing, Southern Europe, Middle East, Latin America, Canada for PartnerRe.
“We expect the new regulation to have a positive effect on the insurers and consequently on the insureds. The risk will be better understood, better assessed and better managed and, therefore, it will also be more accurately priced,” she said.
Pierre Rivier, senior underwriter, life–special deals for PartnerRe, added that bigger, more sophisticated companies may benefit more.
“The new solvency regulation will have a positive impact on the big and very well diversified companies. Other niche players that are smaller and not as diversified could be negatively affected,” he said.
Continue Reading “Reinsurers to offer adaptive solutions for Solvency II in Mexico” at Intelligent Insurer News
Is Solvency II in Europe a role model for the LatAm region? This is the question Dr Winfried Heinen, head of Gen Re’s international life/health business and executive director of General Reinsurance AG, Cologne, will be exploring in a panel discussion on day three of FIDES.
“The claim that Solvency II should be a role model for the world was made by Karel van Hulle of the European Commission who, until his retirement, was in charge of implementing Solvency II in the EU,” said Heinen.
“Other voices have called Solvency II ‘the triumph of actuaries over common sense’. The truth is probably somewhere in between.“
Personally I think that in its entirety Solvency II is not a model for other markets, just because many of its features address topics that are specific to Europe and also because it is overly complex.
Continue Reading “Solvency II should not in its entirety be a model for LatAm” at Intelligent Insurer News
The European Parliament has published an exchange of letters between the chair of its Economic and Monetary Affairs Committee (Roberto Gualtieri) and the European Commissioner for Financial Stability, Financial Services & the Capital Markets Union (Jonathan Hill).
In his letter of 1 April 2015, Gualtieri referred to the Commission’s two Delegated Acts on third-country equivalence –
- The first for Switzerland, confirming its equivalence for reinsurance, group solvency and group supervision; and
- The (so called) “second package“, for Australia, Bermuda, Brazil, Canada, Mexico and the US, confirming their provisional equivalence for group solvency (only);
before reiterating the Committee’s position “that these Delegated Acts are to be presented in a separate manner, per third country and per area“.
Continue Reading ” Solvency II third-country equivalence – an unexpected fly in the ointment ” at Lexology
The European Commission has published its first Solvency II third-country equivalence decisions, and they include a few surprises, says Chris Finney of Cooleys.
The Commission has decided that Switzerland is Solvency II equivalent on all three bases – ie for group capital calculation purposes, for group supervisory purposes, and for reinsurance purposes. There’s no surprise here. These decisions will now be considered by the European Parliament and Council. And, if the Parliament and Council are content – which seems likely – the Swiss equivalence decisions will be made, published in the Official Journal of the European Union, and final.
Group capital purposes
The Commission has also decided that Australia, Bermuda, Brazil, Canada, Mexico and the USA are Solvency II equivalent, for group capital purposes (only); on a 10 year renewable basis (only) and, in the case of Bermuda, only in respect of commercial insurers, not captives. This is a little surprising…
Continue Reading “Surprises over European Commission’s Solvency II country decisions” at The Global Legal Post
OLDWICK, N.J.–(BUSINESS WIRE)–In this final of five June 2015 “First Monday” episodes, A.M. Best’s new managing director in the agency’s Mexico office, Manuel Calderón, discusses his country’s Solvency II-type regulatory regime and how it is working to balance risk and growth. Click on http://www.ambest.com/v.asp?v=fmmexico615 to view the entire video program. “First Monday” is A.M. Best’s monthly program featuring commentary by the company’s leading analysts.
The Mexican insurance market is the second largest insurance market in Latin America behind Brazil and has steadily grown in recent years. Accompanying this growth is an evolving regulatory framework to which A.M. Best has responded by opening the Mexico City office and creating a national rating scale.
Calderón speaks about this regulatory framework. “Mexico has made some changes in the laws and the rules for insurance companies, in order to duplicate a supervision model like Solvency II,” said Calderón.
Continue Reading ” A.M.BestTV: Solvency Rules Shape Mexico’s Risk Culture ” at Business Wire
Mexico’s new insurance and surety law came into force on Saturday, giving the country one of the most sophisticated regulatory frameworks on insurance in the world.
The law introduces a three-pillar solvency framework, with pillar I based on capital adequacy and valuation, pillar II on enterprise risk management (ERM), and pillar III on market disclosure.
Despite officially being introduced on Saturday, the quantitative aspects, or everything that falls under pillar I, will not come into force until April 2016, giving insurers more time to adapt to the changes.
Continue Reading “SPOTLIGHT: Mexico’s insurance and surety law” at BN Americas