Solvency II publications: Swiss Re expertise

A number of fact sheets and other publications are available on the topic of Solvency II. Swiss Re has produced these to provide our clients, and other important stakeholders, with insight into key elements of the new regulatory regime.

Private equity investments in a changing regulatory environment Should regulatory capital requirements alone determine if an investment is undertaken? Or should the performance and specific risk characteristics of an asset class be the main determinants? A recent study conducted by the University of St. Gallen provides insight into how the prevailing regulatory environment impacts this decision-making process for private equity investments. This fact sheet addresses these issues in the context of Solvency II and the Swiss Solvency Test.
Capital drivers for the marine insurance industry under Solvency II Marine will become one of the most capital-intensive lines of business under Solvency II. This fact sheet explains why, discusses the key capital drivers for the marine sector, and illustrates the impact of reinsurance as a capital solution.

Recognition of reinsurance under Solvency II Most insurance companies currently use risk mitigation techniques as an instrument to stabilise their earnings and reduce capital requirements. Solvency II outlines clear principles governing the recognition of such techniques. This fact sheet addresses (i) why risk mitigation is fully recognised for the first time under Solvency II, and (ii) the principles associated with the standard formula. The difference in treatment of re/insurance by the International Financial Reporting Standards and Solvency II is also discussed.

How reinsurance impacts non-life insurers under Solvency II – a case study Each insurance company must decide whether to calculate capital requirements under Solvency II using the standard formula, internal model or partial internal model. This decision, as the fact sheet illustrates, impacts how reinsurance is considered and how much risk capital the company needs to hold.

Retrospective solutions under Solvency II: passing the non-life loss reserves hurdle Under Solvency II, non-life loss reserves will be recognised as a major driver of volatility and thus of required capital. This fact sheet outlines how clients can transfer any additional capital burden via retrospective reinsurance solutions, allowing them to protect their loss reserves and thus free-up the capital otherwise required to back-them up.

Equivalence in reinsurance treatment, group solvency and group supervision under Solvency II Solvency II will regulate re/insurance companies and groups within the European Economic Area (EEA). The question arises how to treat dependencies with companies outside the EEA. As this fact sheet discusses, the concept of equivalence between regulatory regimes has been introduced to address this question.

Consideration of non-proportional reinsurance under the Solvency II Standard Formula This fact sheet provides insights into the treatment of non-proportional reinsurance under Solvency II.  It argues that, while a full recognition of the benefit of risk mitigation instruments can be achieved with a (partial) internal model, the proposed adjustment factor is clearly a step forward for companies using the standard formula.

Capital requirements for Cat Risks under the Solvency II Standard Formula A Cat loss resulting from extreme or exceptional events can be a significant issue for a re/insurance company. This fact sheet discusses how Cat risks are treated under Solvency II.

The balancing act of capital management: Non-life insurance under Solvency II  This fact sheet discusses the benefits of reinsurance under Solvency II, not just from the perspective of exposure and capacity, but also in terms of a company’s overall capital and risk management framework.

Solvency II – The Standard Formula and non-life reinsurance  Under Solvency II, insurers have a choice of which methods they use to assess risk and capital. While some insurers will opt for the standard formula as the basis for an economic view of their business, they should be aware of its limitations. This report shows how the standard formula deals with non-proportional reinsurance and suggests how it might be improved.

Solvency II and life insurance: Solutions for managing risk and capital
Solvency II is more than just a compliance project: It will be a major driving force in the global insurance landscape. Insurers who shape their strategies now in expectation of the likely changes in regulations will create significant value. Life & Health insurers, in particular, should consider how reinsurance could help to manage risks and improve required capital.

Published 10 October 2011

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The EU insurance market is evolving with the introduction of Solvency II. It is demanding a different approach to strategy and products. In this new environment, reinsurance can enhance capital allocation,...

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