Tag Archives: Capital Requirements

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

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

Mutual LV= weighs merger or disposals as capital rules bite

One of Britain’s largest financial services mutuals has been involved in a secret hunt for a merger partner as a combination of tougher capital requirements and low interest rates hamper its profitability.

dddvtureSky News has learnt that LV=, which has nearly 6m UK customers across insurance, pensions and income protection products, has held aborted talks in recent months with Royal London, its fellow mutual, about a possible tie-up.

Those talks are said to have broken down amid a disagreement over the structure of a deal.

Continue Reading “Mutual LV= weighs merger or disposals as capital rules bite” at Sky News

Solvency II means no need for new EU insurance framework

This announcement is in response to a European Insurance and Occupational Pensions Authority (EIOPA) consultation on the potential harmonisation of frameworks for insurers.that_s_all_folks__by_surrimugge-d6rfav1

The lobby group said in its position paper that Solvency II already allows early intervention when either the Minimum Capital Requirement (MCR), or the Solvency Capital Requirement (SCR) are breached, and that this is sufficient.

It states: “Insurance Europe believes it is important to reiterate that Solvency II already provides several safeguards that…

Continue Reading “Solvency II means no need for new EU insurance framework” at The Actuary

Solvency II complicates captive strategies

The implementation of Solvency II in Europe has provided an additional risk management tool to owners of European captives, but at a cost, forcing risk managers to re-examine whether they are getting the best use out of their captives.confused-face-484x295

Solvency II, the European Union-wide risk-based capital rules for insurers and reinsurers, came into force in January 2016, and with it came new elements that have affected captives, for better or for worse.

“What we’re seeing as managers is an increased interest in strategic reviews and companies re-examining the captives to explore optimization opportunities and thus potentially…

Continue Reading “Solvency II complicates captive strategies ” at Business Insurance News

Don’t bank on Solvency II going away anytime soon

It has become a bit of a guessing game trying to figure out why the UK population voted for Brexit: was it immigration, money, sovereignty? 

However, there is anotheraid1947220-728px-get-rid-of-annoying-people-step-1-version-3 meme that has always appeared in the UK’s wrangles with Europe and that is the issue of what people like to call “red tape.”

The view goes that outside the European Union (EU), the UK will be able to jettison many of the rules that it has found inconvenient.

There’s no doubt that many, even those who did not support the Leave campaign, would not weep to see the back of some of the more overbearing EU financial regulations.

Continue Reading “Don’t bank on Solvency II going away anytime soon” at the Actuarial Post

Insurers claim capital rules are harming customers

UK insurance groups have claimed that the latest EU capital regulations are harming customers and distorting markets — and are calling for changes in the way they are implemented.

According to thefrustrated-home-inspector-customers Association of British Insurers, the Solvency II rules, which came into force at the start of the year, have had unintended consequences and a reassessment is needed.

Its comments come in a submission to parliament’s Treasury select committee, which has launched an inquiry into the post-Brexit future of Solvency II in the UK.

When it launched the investigation in September, the committee said it would look at the impact of the rules on customers, the economy and the competitiveness of the UK insurance industry.

Continue Reading “Insurers claim capital rules are harming customers” at Financial Times

PensionsEurope seizes on Norway plan to warn against solvency rules

PensionsEurope has responded to Norwegian plans to introduce solvency capital requirements for pension funds to reiterate warnings on the detrimental effect of such requirements and again point to IORP II statements againstkayaking_in_reine_lofoten_norway_2_1_e9050661-f349-4d95-bb31-8d4cd40ff0ea the further development of solvency models for pension funds.

Commenting on Norwegian government plans to introduce a simplified Solvency II requirement for pension funds in January 2018, the umbrella association for national workplace pension bodies warned against solvency capital requirements for pension funds – be they at national or EU level – as they would have significant negative consequences.

Continue Reading “PensionsEurope seizes on Norway plan to warn against solvency rules” at  IPE Investment & Pensions Europe

A fundamental flaw in Solvency II

In his submission to the Committee of European Insurance and Occupational Pensions (CEIOPS), now known as the European Insurance and Occupational Pensions Authority stop(EIOPA) consultation of 2009, on the Level 2 implementation of the risk margin, Dutch actuary Hans Waszink drew attention to a fundamental flaw in the proposed formula.

In particular, he pointed out that, in certain conditions, the risk margin could be even higher than the solvency capital requirement (SCR) itself.

This incongruity had been of little practical significance in most situations, but in the current low interest rate environment and for long-duration obligations such as longevity it can, and does, produce very anomalous outcomes.

Continue Reading “A fundamental flaw in Solvency II” at The Actuary News

IVASS approves look-through approach to determine solvency capital requirements

IVASS, the Italian insurance regulator, recently approved IVASS Regulation 28 of July 26 2016 on aon-benfield-swiss-re-weather-reinsurancethe look-through approach to determine the solvency capital requirements of insurers in the context of:

Under the standard formula, the solvency capital requirement will be determined by applying the look-through approach to collective investment schemes consisting of undertakings for collective…

Continue Reading “IVASS approves look-through approach to determine solvency capital requirements” at International Law Office News