ITS and GL Set 2

Main comments on reporting and disclosure

28 April 2015, Frankfurt

228.04.2015

Introduction

• Consultation: ended beginning of March• March/April: discussions and telcos/meetings with

different stakeholders• Final draft: June 2015

Process

•Particular stakeholder comments on elements of the consultation paper•Preparedness for regular reporting from 1 January 2016

Areas of attention

Process

428.04.2015

General results from consultation

• Received comments from different types of stakeholders:• Industry associations• Specific undertakings• Actuarial associations• Accounting associations• Asset managers• Consultants/Auditors

• Allowed for a very good perspective of all opinions/challenges

528.04.2015

Process and main message

• Telcos were held with specific stakeholders• Additional input from stakeholders was received, specific

issues were discussed on a workshop held on 24th April• Final package will aim a balanced, appropriate reporting

package

“We need to differentiate short term implementation challenges from long term relevance of the prudential

reporting package”

CP-14-052

ITS on supervisory reporting

728.04.2015

CP-14-052

• On the ITS articles:o Definition of Solvency II currency; exchange rate to be used;

reporting formats; proportionality principle

• On the proportionality principle:o Materiality principle: defined in article 305 and should be applied

in generalo Proportionality principle: specific proportionality rules have been

defined for reporting throughout the legislative framework:- In the Solvency II Directive: Article 35 - limitations and exemptions for

quarterly and item-by-item reporting;- In Commission Delegated Regulation 2015/35: Article 59 - Calculations

of the risk margin during the financial year;- ITS (consultation paper): proportionate, risk-based requirements for the

lower level of granularity and Article 7 for the quarterly reporting.

828.04.2015

CP-14-052

• On the specific templates/LOGs, main issues under discussion:o Information by country in template S.04.01: stakeholders

underline the increasing complexity of the new “host approach” added to the template compared to the 2012 version

o Information on the external rating/nominated ECAI in S.06.02: stakeholders pointed to the cost to keep the ratings in the assets templates

o Information of best estimate by country/currency as in S.12.03/S.17.03: Stakeholders underline the excessively detailed new requirements, and do not find it in line with other kinds of requirements for which a threshold exists

928.04.2015

CP-14-052

• On the specific templates/LOGs, main issues under discussion:o Information on the use of LTGA in templates S.12.01/S.17.01:

stakeholders commented that this goes beyond what is required and would introduce an unnecessary level of burden.

o Information on the impact of LTGA on S.22.01: stakeholders comment that calculations with and without the long term guarantee and transitional measures are already a very high burden for undertakings. Further calculations, which only represent an intermediate step between the variants with and without the measures, would disproportionately increase the effort - without providing any added value.

1028.04.2015

CP-14-052

• On the specific templates/LOGs, main issues under discussion:o In particular for groups in S.35.01: stakeholders mention that

another level of complexity is added, for the situation where one of the undertakings of the group applies long term guarantees or transitional measures and if intra-group transactions (ITG) exist, a further calculation is required at the group level in QRT S.35.01.g to disclose the effect of a long term guarantee or transitional measure without the inclusion of intra-group transactions. This additional calculation would disproportionately increase the effort - without providing any added value.

1128.04.2015

CP-14-052

• On the specific templates/LOGs, main issues under discussion:o Information by interest rate as in template S.22.04: Comments

raised that the split of best estimates and the duration of liabilities by the Solvency I interest rate would mean a huge additional burden for undertakings.

CP-14-045

GL on Financial Stability Reporting

1328.04.2015

CP-14-045

• On the Guidelines:

o The foreseen timelines for group reporting are too short (6 weeks after transition, 9 weeks in 2016), especially for items which were annual in prudential reporting.

o EIOPA should phase-in of the financial stability reporting, so that the first reporting takes place in 2017. This will enable EIOPA to make an assessment as to whether any additional financial stability specific information is needed.

CP-14-055

ITS on public disclosure

1528.04.2015

CP-14-055

• On the ITS articles:o Definition of Solvency II currency; exchange rate to be used;

reporting formats; extent of the disclosure package; approval by AMSB of the disclosure policy

• On the specific templates/LOGs, main issues under discussion:o Information on triangles as in S.19.01: stakeholders mention that

providing development triangles for the business as a whole is of little value and therefore does not meet the stated objective of disclosure which is to give users "insights into the uncertainty surrounding estimates“.

o Information on the undertakings within the scope of the group as in S.32.01: Comments raised that the amount of information requested for public disclosure is very detailed and would lead to a level of transparency which could distort competition.

CP 14-047

GL on reporting and disclosure

1728.04.2015

CP 14-047

• On the specific Guidelines, main issues under discussion:o Length of the package: Stakeholders claim that the demands

for public disclosure in the SFCR are generally excessively detailed and far too extensive compared to the target group of the information.

o Definition of “any other information”: Several of the guidelines referring to the RSR (Guidelines 30, 34, 36 and 38) specify reporting on “any other information” or “any other material information” (of structure of SFCR/RSR, Annex XX Delegated regulation). The Guideline should refer to the relevant source in the Delegated regulation.

.

1828.04.2015

CP 14-047

• On the specific Guidelines, main issues under discussion:o Approval by AMSB: GL 47 requires approval of the QRTs which

would go beyond the Directive. o Proportionality principle: stakeholders claim that no clear

indication has been made that only material information should be requested. Stakeholders proposed drafting proposals for the following guidelines to give examples, however this list is not exhaustive: guidelines 23, 27, 30, 31, 32, 33, 36 and 37.

CP 14-044

GL on methods to determine the market share

2028.04.2015

CP 14-044

• On the specific Guidelines, main issues under discussion:o Unit-linked business: stakeholders claim that the assumption

underlying the market share threshold is that undertakings with a riskier balance sheet should not be exempted from reporting. Hence according to comments received pure unit-linked business should be excluded when assessing the market share given that the bulk of the risk is borne by the policyholder.

o Treatment of composites: Stakeholders commented that Guideline 5 should be deleted as it goes against the spirit of Article 35(6)(a) of Directive: a composite undertaking that qualifies for the reporting exemption for example in the life business, will have to report anyway on that part because of another business unit (e.g. non-life) falling above the 20% threshold.

2128.04.2015

CP 14-044

• On the specific templates/LOGs, main issues under discussion:o GL that are not needed: stakeholders ask that Guidelines 7/8

are deleted o GLs that should be added: Stakeholders ask for guidance on

- how the proportionality test referred to in Article 35(8) of the Solvency II Framework Directive will be applied by supervisory authorities;- an obligation for the supervisory authorities to inform companies about granting or cancelling the exemption on quarterly reporting in advance- how to determine a transition period for implementing the reporting process in the company when the exemption on quarterly reporting no longer applies- how supervisory authorities intend to publish the annual market share thresholds for the purposes of transparency

State of preparedness for regular reporting from 1 January 2016

2328.04.2015

State of preparedness for reporting under Solvency II (1)

Steps taken so far to prepare for the implementation of the reporting from 1 January 2016

• Preparatory phase: aim to significantly increase the preparedness of both supervisors and insurers for Solvency II and guarantee a good level of quality from day-1 of Solvency II implementation. • So far, the aim of the preparatory phase has been met -

significant progress and interaction between industry and supervisors

• Industry and supervisors now need to concentrate on the actual submission of the information (from a process perspective, including data collection and controls)

2428.04.2015

State of preparedness for reporting under Solvency II (2)

• Taxonomy: final taxonomy will be available more than 9 months before the first reporting submission in 2016.• Version 1 and 2 April and May; version based on final

package on 3rd quarter of 2015• Tool for undertakings: already available for the

Preparatory Phase; will be updated for the application of the "full” Solvency II taxonomy including the ECB add-ons. o More information including the software, the

documentation and useful videos is available in http://t4u.eurofiling.info/

2528.04.2015

Timeline

• Approval of ITS and Guidelines at June BoS

• Final Report on both ITS and Guidelines to be published when submitted to COM (end June)

• Version 2.0 of taxonomy based on full package published 3rd quarter of 2015

• Endorsement by the COM (end of Summer)

2628.04.2015

Discussion

Questions/Discussion