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What to do about that medicine they call Solvency II? Side effects on European insurance regulation discussed. Also see

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solvency ii are we there yet

Solvency II: Are We There Yet?

December 2010 presentation by

Claude Penland, Associate of the Casualty Actuarial Society

what is solvency ii
What is Solvency II?
  • Solvency II is the updated set of regulatory requirements for insurance firms that operate in the European Union.
  • See Wikipedia at
  • More info at
solvency ii side effects part one
Solvency II Side Effects, Part One
  • Insurers might need to outsource their asset management
  • Stock portfolios sold off
  • Captives might need to be run off
  • Specialist employee costs are being jacked up
  • Not enough regulators with experience
solvency ii side effects part two
Solvency II Side Effects, Part Two
  • International Financial Reporting Standards and Solvency II hit companies twice and from different angles
  • Demand for bonds may be driven artificially high (and yields low) due to dumping of equities and buying of bonds
  • Cost overruns
is catastrophe risk appropriately represented
Is Catastrophe Risk Appropriately Represented?
  • Mega Broker says no
  • Aon Benfield says no
  • Perils says that’s a mighty big catastrophe that insurers are expected to be prepared for
solvency ii committees
Solvency II Committees
  • Ironically, they say they must now simplify the plans they’ve charted.
  •
european pensions
European Pensions
  • Pension Funds & Insurers disagree.
  • Pension Funds don’t want to be regulated by Solvency II.
  • Insurers say what is good for the goose is good for the gander.
  •
final points
Final Points
  • Most recent Solvency II test results might be released in March 2011
  • Japan, Switzerland and Bermuda are going through “equivalency tests”
  • Expect M&A
  • Expect Redomiciles