The Standard Formula Podcast | Using an Internal Model to Calculate the Solvency Capital Requirement
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Solvency II is organised around three core pillars of prudential regulation, which ensure the safety and soundness of (re)insurers, in line with the scale, nature and complexity of their business: - Pillar One focuses on...more
The PRA has released an important statement on its approach to funded reinsurance. Our view is that the statement endorses the conceptual principle that funded reinsurance (particularly to offshore counterparties) should best...more
There are two main methods of calculating the solvency capital requirement (SCR) under Solvency II, the “standard formula” and “internal model” methods: (a) The standard formula method, as its name suggests, is the default...more
The Solvency Capital Requirement (SCR) is designed to protect policyholders by helping ensure that insurers can survive difficult periods and pay claims as they fall due. It prescribes a specific level of capital that an...more
Our latest episode of “The Standard Formula” Back to Basics series explores the internal model method for calculating the Solvency Capital Requirement. Host Rob Chaplin is joined by George Belcher to dissect the advantages...more
“The value of technical provisions should correspond to the amount which another insurance or reinsurance undertaking (the reference undertaking) would be expected to require to take over and fulfil the underlying insurance...more
The primary function of an insurer is the assumption and management of insurance risk. Very commonly, this will involve an insurer passing (or ceding) risk to other (re)insurers or protection providers in the relevant market....more
Own funds is the Solvency II term for the items that constitute a (re)insurer’s regulatory capital. These are principally balance sheet items, with limited allowance for off-balance sheet items. Own funds are items that...more
The proposals would give the Bank of England wide-ranging powers to deal with acute failure scenarios, treating policyholder liabilities as loss-absorbing. HM Treasury (HMT) is proposing1 a new UK resolution regime for...more
The post-Brexit Solvency II reform aims for a more competitive and dynamic insurance sector in the UK. The UK government’s proposals to adapt the Solvency II regime more appropriately to the national insurance market have...more
Large insurers that operate across national borders should consider recent guidance on capital standards from the International Association of Insurance Supervisors (IAIS), in particular on the kinds of instruments that make...more
Insurance Ordinance amendments would create a risk-based capital regime aligned with international standards. On 6 April 2023, the Hong Kong government introduced the Insurance (Amendment) Bill 2023 into the Legislative...more
This week, legislation was proposed in New York that would significantly change how an insurer’s capital needs and availability are calculated and reported. The proposed legislation would require that capital be calculated on...more
The April 29th deadline is rapidly approaching for insurers, reinsurers and other interested insurance industry participants to submit comments on S&P Global Ratings’ proposal for changing its methodology analyzing...more
Though Vermont’s rural character has somewhat lessened the direct effects of the COVID-19 pandemic, at least compared with some of its neighbors, there can be no doubt that the virus’ impact on the state will be devastating...more
The National Association of Insurance Commissioners (NAIC) Reinsurance (E) Task Force has approved proposed revisions to the Credit for Reinsurance Model Law (Model Law) and the Credit for Reinsurance Model Regulation (Model...more
On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act). While news headlines have focused on relaxation of various rules for banks contained in the...more
The National Association of Insurance Commissioners (NAIC) held its 2017 Fall National Meeting from December 2 through December 4 in Honolulu, Hawaii. Despite the exotic locale, the Fall National Meeting was not as well...more
The federal government, state insurance regulators and international regulatory bodies are all actively engaged in the development of capital standard calculations to be employed in the supervision of entities in their...more
Insurance Europe, a trade body comprised of insurance associations representing approximately 95% of European premium insurance income, recently issued a press release reaffirming its stance on EU proposals for harmonising...more
The UK’s Prudential Regulation Authority (PRA) has published a Consultation Paper (CP) “CP32/16 Dealing with a market turning event in the general insurance sector“. The CP attaches a draft Supervisory Statement (SS), which...more
On April 26, 2016, Alabama Governor Robert J. Bentley approved House Bill No. 270, which revised Alabama’s Captive Insurers Act. The revised Captive Insurers Act went into effect on July 1, 2016, and included amendments to...more
- Fed Takes First Steps Toward Setting Capital Requirements for Some Insurers - New Wave of COI Rate Increase Lawsuits Hits the Industry - STOLI Policies Cancelled, Insurers Retain Premium -...more
On June 3, the Federal Reserve Board (the "Fed") released an advance notice of proposed rulemaking (ANPR) and began soliciting comments for the conceptual framework for capital standards that it will use when overseeing the...more
Regulatory Developments - FDIC Seeks Comments on Third-Party Lending Guidance - On July 29, the FDIC announced that it is seeking comments on proposed Guidance for Third-Party Lending addressing steps...more