solvency ii

• Solvency Ii

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Actuary - Non-traditional employment

1 For example, the Basel II accord for financial institutions, and its

analogue, the Solvency II accord for insurance companies, requires such

institutions to account for operational risk separately and in addition to

credit risk|credit, Actuarial reserves|reserve, asset, and insolvency risk


Operational risk - Difficulties

1 In addition to the Basel II requirement for banks, this is now a requirement for European insurance

firms who are in the process of implementing Solvency II, the

equivalent of Basel II for the banking sector.


Solvency II

1 The 'Solvency II Directive' [http://eur-lex.europa.eu/LexUriServ/L

exUriServ.do?uri=OJ:L:2009:335:0001:01:EN:HTML 2009/138/EC] is an EU Directive that

codifies and harmonises the EU insurance regulation. Primarily this concerns the amount of capital that EU insurance companies must hold

to reduce the risk of insolvency.https://store.theartofservice.com/the-solvency-ii-toolkit.html

Solvency II

1 Once the Omnibus II directive is approved by the European

Parliament, Solvency II will be scheduled to come into effect on 1 January 2016. This date has been

pushed back many times.


Solvency II - Political Implications of Solvency II

1 Solvency II is a major political issue in the UK which may affect how the country votes should a referendum on EU membership take place in the

coming years.http://www.express.co.uk/com

ment/expresscomment/395755/Solvency-II-shows-the-EU-is-truly-bankrupt-of-ideas?goback=

%2Egmp_5151910#%21https://store.theartofservice.com/the-solvency-ii-toolkit.html

Solvency II - Political Implications of Solvency II

1 Doubts about the basis of the Solvency II legislation, in particular the enforcement of a market-consistent risk model have also been

expressed by American subsidiaries of UK parents - the impact of the 'equivalency' requirements are

not well understood and there is some concern that the legislation could lead to overseas

subsidiaries becoming uncompetitive with the local peers, resulting on the need to sell them off,

potentially resulting in a 'Fortress Europe'.http://www.solvencyiinews.com/europe/redomiciling-still-an-option-for-dissatisfied-prudential


Solvency II - Background

1 Since the initial Solvency I Directive 73/239/EEC was introduced in 1973, more

elaborate risk management systems developed. Solvency II reflects new risk

management practices to define required capital and manage risk. While the Solvency

I Directive was aimed at revising and updating the current EU Solvency regime,

Solvency II has a much wider scope. A solvency capital requirement may have the

following purposes:


Solvency II - Background

1 Often called Basel for insurers, Solvency II is somewhat similar to

the banking regulations of Basel II. For example, the proposed Solvency II framework has three main areas

(pillars):


Solvency II - Pillar 1

1 The Solvency II Directive provides regional supervisors with a number

of discretions to address breaches of the MCR, including the withdrawal of

authorisation from selling new business and the winding up of the

company.


Solvency II - Criticisms

1 10 2011 Q2 2012 The calibration of the standard formula for assessing equity risk has been criticized for the fact that the procedure

used for determining correlations between different asset classes gives rise to spurious

(i.e., unreliable) correlations or spurious relationships.Stefan Mittnik: Solvency II

Calibrations: Where Curiosity Meets Spuriosity Working Paper Number 04, 2011, Center for

Quantitative Risk Analysis (CEQURA), Department of Statistics, University of Munich,


Systemic risk - Systemic risk and insurance

1 The report underlines that supervisors and policymakers should

focus on activities rather than financial institutions when

introducing new regulation and that upcoming insurance regulatory

regimes, such as Solvency II in the European Union, already adequately

address insurance activities.


Institute and Faculty of Actuaries - Statistics on shortage occupation list migrants

1 Despite Solvency II Directive work being cited as a reason for a

shortage of Actuaries, only one migrant had the description Solvency

II in their job title.


Information Framework - IBM Insurance Information Warehouse (IIW)

1 # Content to cover analysis in critical insurance business areas such as

Profitability, CRM, Financial Reporting and Risk Management (For example,

Solvency II.[https://eiopa.europa.eu/activities/i

nsurance/solvency-ii/index.html Solvency II]) Selected analysis areas are described in further detail at the

end of this chapterhttps://store.theartofservice.com/the-solvency-ii-toolkit.html

Information Framework - IBM Insurance Information Warehouse (IIW)

1 business users. Examples include: Analytical Customer Relationship

Management (CRM); Profitability; Claims Efficiency; Intermediary Performance;

Business Performance; Risk and Compliance; Solvency I; Solvency II;

Sarbanes Oxley Act (SOA); International Accounting Standards (IAS) and International Financial Reporting

Standards (IFRS); and Risk Management.


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