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.
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
In 2013, the Insurance Regulatory and Development Authority of India (Irdai) had proposed a lower solvency margin for insurers, at 145 per cent against 150 per cent currently, including a risk charge.
Earlier, in a proposal on a risk-based solvency approach, the regulator had constituted a committee to suggest a roadmap to move to Solvency-II norms.
Solvency-II is a European Union (EU) legislative programme, to be implemented in all 28 member-states. These are to insurers what Basel-III norms are to banks and introduces a harmonised and EU-wide insurance regulatory regime.
Continue Reading “Panel set up on risk-based capital norms in insurance” at Business Standard News
* Insurers have made progress adjusting to Solvency II
* Still urgent need for change at some life insurers
* No surprises in insurer capital positions
* Dividend policies a concern mainly at stressed insurers
By Jonathan Gould and Huw Jones
FRANKFURT/LONDON, May 23 (Reuters) – Insurers are making progress in adjusting their business models to account for low interest rates and the complex new risk-capital regime called Solvency II that took effect at the start of the year, the EU’s top insurance regulator said.
Continue Reading “REUTERS SUMMIT-EU watchdog lauds insurer moves to adapt business models” at Yahoo Finance
Malta, with its respectable number of insurance companies, is pushing ahead to attract quality not quantity, but of course the numbers are important and no effort is to be spared to expand the internal market. And it goes without saying that a number of jurisdictions are active to pursue Captive owners and reinsurance companies, to re-domicile.
So, one may ask in the context of Malta, what can be done to overcome the challenges ahead to attract more investors?
ArgoGlobal SE, which opened an office in Malta two years ago, was the first property/casualty insurance company to obtain a Societas Europaea licence from the Malta Financial Services Authority. Something that could act as a trailblazer, encouraging others to seek the same.
Continue Reading “Can Malta become the ‘Bermuda of the Mediterranean’?” at Malta Today
PKF is to promote Malta at a conference, fully supported by experienced captive insurance managers and risk management professionals, for a day of world-class networking in New York. The avenue is the prestigious Bar Association building located at 42 West 44th Street in New York, USA.
The main topic of this conference is to see what Malta can offer to US Captives seeking to re-domicile or open up subsidiaries in the EU to tap into their European risks.
One may well ask, with so much competition between EU domiciles, what can Malta offer in the insurance sector which sets it apart from other offshore centres such as the Isle of Man, Channel Islands, Gibraltar and of course the Caribbean stalwarts such as Bermuda, Barbados and Cayman Islands?
Continue Reading “PKF to promote Malta Captives in New York” at Malta Today
(The following statement was released by the rating agency) Link to Fitch Ratings’ Report: Solvency II Metrics – Limited Use in Insurer Ratings here LONDON, January 11 (Fitch) Solvency II (S2) metrics are not comparable between insurers due to their different calculation approaches and will therefore not be a direct driver of ratings, Fitch Ratings says.
Inconsistencies arise because many insurers are applying different transitional measures, which will strongly affect their metrics.
Some are also using internal models rather than the standard formula and we believe some regulators are taking a tougher stance than others in how they interpret and apply S2. We will continue to assess insurers’ capital primarily using our Prism Factor-Based Capital Model, as we believe Prism scores are more comparable than S2 metrics.
Continue Reading “Fitch: Solvency II Metrics Have Limited Use in Insurer Ratings”
LONDON–(BUSINESS WIRE)–Many European captives have embraced Solvency II’s increased regulatory requirements as an opportunity to focus more closely on risk management and refine their investment strategies. For the most part, captives are not treating the regulations as merely a box-ticking exercise. A new report from A.M. Best notes that the European captives it rates are using the information they have gathered to meet Solvency II’s qualitative and reporting requirements as an opportunity to also review their business models.
Initially, it appeared that captive owners viewed the Solvency II requirements as an onerous burden due to the cost issues. In its new report, titled, “European Captives Increase Focus on Risk Management and Investments Ahead of Solvency II,” A.M.
Continue Reading “A.M. Best Special Report: European Captives Increase Focus on Risk Management and Investments Ahead of Solvency II” at Business Wire
Smaller European insurers should consider the option of subordinated debt as the date of Solvency II implementation looms.
This is the opinion of Oliver Tattan, chief executive officer (CEO) of debt capital provider Insurance Regulatory Capital (IRC).
He explained that the capital solution, which has previously been the domain of large insurers, is now available to small and mid-size insurers and can be very helpful when dealing with Solvency II regulation.
In the past, smaller insurers have used equity or quota share reinsurance, whereas the larger insurers took advantage of subordinated debt. Now, two things have changed,” said Tattan.
Continue Reading “European insurers should consider subordinated debt” at Intelligent Insurer
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
FRANKFURT/LONDON, May 11 (Reuters) – Expectations of rising dividends and share buybacks from Europe’s insurance companies are fading as ultra low interest rates make it harder for them to meet new capital regulations.
Rock-bottom interest rates reduce insurers’ investment returns, raising the risk of them having to eat into capital reserves to pay policyholders.
With yields on some government bonds — staple investments for insurers — turning negative recently, the International Monetary Fund (IMF) warned last month of a “high and rising” danger to weaker mid-sized European life insurers.
Continue Reading “Insurers’ dividend growth in doubt amid solvency worries” at Reuters News