Solvency II Solution of the Year: Moody's Analytics

The severe impact of the Covid-19 pandemic on bond and equity markets had a knock-on effect on insurers' balance sheets. Most firms' solvency ratios fell in the early part of 2020, in some cases dramatically.

In all cases, capital management teams were kept busy with tracking their solvency and liquidity condition, and the events have highlighted the importance of being able to monitor solvency metrics more frequently.

A spokesperson for Moody's Analytics says: "The increased volatility in the financial markets has meant that senior management has required more timely updates on the solvency ratio to monitor how resilient the solvency position is, understand the drivers of change, and assess whether additional management actions need to be taken."

This is where the provider's solution adds value. It comprises the RiskIntegrity suite, which offers standard formula and internal model capabilities, and scenario-generation solutions to meet specific business challenges of Solvency II preparation and compliance.

In addition, Moody's Analytics engages with the market around solvency metrics, business projections, business planning, own risk and solvency assessment, and stress testing. In 2020, the firm launched its SolvencyWatch solution to help insurers update their solvency metrics in real time.

Moody's Analytics says its solutions enable insurers to perform a range of functions including valuation, capital and solvency calculations and analytics. In addition, they support the pending demands of new financial reporting frameworks including IFRS 9 and IFRS 17.

This led one judge to praise Moody's Analytics for its extensive coverage.

Another judge said the provider's solutions allow insurers to better understand their business model and to test it with market-based data.