What is Solvency II equivalence?

What is Solvency II equivalence?

The Solvency II Directive recognises that the insurance industry is a global industry. The European Commission may decide about the equivalence of a third country’s solvency and prudential regime towards avoiding unnecessary duplication of regulation.

Does Solvency II apply to us?

The US has been granted provisional equivalence with regard to solvency calculations for 10 years from January 1, 2016. However, this primarily assists only European insurance groups that do not need to calculate solvency for US subsidiaries within the group using Solvency II calculations.

What is a good Solvency II ratio?

Also, Solvency Ratio is also seen by some as a buffer against adverse developments. Maintaining a 150% solvency level might not only increase the chances of securing the ability to meet obligations but also the capacity to continue operating after an adverse event.

What is Solvency II matching adjustment?

Solvency II’s Matching Adjustment (MA) provisions give insurers relief for holding certain long-term assets which match the cash flows of a designated portfolio of life or annuity insurance and reinsurance obligations.

Is Solvency II equivalent to UK?

The UK declares the EU equivalent for Solvency II purposes: a political move. On the 9th November 2020, Chancellor Rishi Sunak declared that for Solvency II purposes the UK deems the regimes of each EEA state equivalent to that of the UK.

Is Bermuda Solvency II equivalent?

Bermuda has been granted equivalent status under the Solvency II directive, besides being approved as a qualified jurisdiction by the US National Association of Insurance commissioners.In the current socio-economic climate, one could be forgiven for thinking that international businesses use offshore jurisdictions to …

Who is subject to Solvency II?

Jurisdiction Solvency II will apply to most insurers and reinsurers with their head office in the European Union (EU), including mutuals, and companies in run-off unless their annual premium income is less than €5 million.

What are Solvency II requirements?

Under Solvency II, capital requirements are determined on the basis of a 99.5% value-at-risk measure over one year, meaning that enough capital must be held to cover the market-consistent losses that may occur over the next year with a confidence level of 99.5%, resulting from changes in market values of assets held by …

How is the SCR Calculated?

The Basic SCR is calculated by considering different modules of risks: market (equity, property, interest rate, credit spread, currency and concentration), counterparty default, insurance (separately for life, health and non-life business) and intangible assets.

What are Solvency II technical provisions?

Solvency II requires the technical provisions to be a “best estimate” of the current liabilities relating to insurance contracts plus a risk margin. This section covers the claims provision and the premium provision that together make up the best estimate.

When did Solvency II go live?

1 January 2016
Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency. Following an EU Parliament vote on the Omnibus II Directive on 11 March 2014, Solvency II came into effect on 1 January 2016.