11

Global Association of Risk Global Association of Risk ProfessionalsProfessionals

The countdown to The countdown to

Solvency IISolvency II

Μυρτώ ΧαμπάκηΥπεύθυνη Οικονομικών Θεμάτων & Κλάδου Ζωής Ε.Α.Ε.Ε

22

Target Implementation DatesTarget Implementation Dates

20122012

31-10-201231-10-2012

20142014

1-1-20141-1-2014

20152015

1-1-2015 +1-1-2015 +

X ?

33

Delay FactorsDelay Factors

• Many outstanding issues :– IM’s– ORSA– Groups– QRT’s

• Involvement of high level political instruments:– European Commission– European Council– European Parliament

44

Solvency II and the European State Solvency II and the European State Debt CrisisDebt Crisis

• “All inclusive” Risk Framework

• Emerging risks arising from the turbulence in European and global economy (MKT risk)

• Difficulties in financing additional capital

• Conflicting interests

55

Solvency II – Omnibus IISolvency II – Omnibus II

Omnibus II scope

Omnibus II as a vehicle for Solvency II revisions

Omnibus II and supervisory powers for concluding Solvency II - Level II measures

A vicious circleA vicious circle

66

Trialogue and Impact Assessment Trialogue and Impact Assessment (IA) – QIS5+(IA) – QIS5+

European Commission

European Council

European Parliament

SupervisorsEuropean

Insurance Market

77

CCP, Matching Adjustment, CCP, Matching Adjustment, Extrapolation of Risk Free CurveExtrapolation of Risk Free CurveCounter Cyclical Premium (CCP) – reduces the discount rate used to value liabilities in times of excessive market volatility. Temporary measure that applies to all liabilities in the portfolio (other than those benefiting from a matching premium). The CCP will be introduced by EIOPA.

Matching Premium (MP) – reduces the amount of capital that needs to be held for long-term liabilities that are ‘matched’ by a portfolio of assets with similar duration and cash flows. This is to be a permanent measure that can only be applied to specific assets and liabilities that meet a strict set of criteria.

Extrapolation of the risk-free interest rate where market data is no longer considered deep, liquid and transparent.

IA conclusions to be published by the end of March 2013

88

Solvency II and Pillar IIISolvency II and Pillar III

• Article 51 of Solvency II Directive

• SFCR and QRT’s

• Principles of materiality and proportionality

• Reporting of any alteration in capital circumstances

99

Solvency II and Pillar IIISolvency II and Pillar III

48 supervisory reporting templates annually

(20 quarterly)

Solo Groups

29 supervisory reporting templates annually

(13 quarterly)

11 templates for public disclosure

7 templates for public disclosure

1010

Solvency II and Pillar IIISolvency II and Pillar III

• Heavy work load

• Complicated requirements

• Costly

• IT resources

• Is there an “actual” purpose ?

• Many delays in finalization of reporting specs

• What about “competition” data?

• Will the customer understand ?

The criticismThe criticism

1111

Over-complexity or … prudency

?