General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
December 20, 2018

EIOPA published the second annual report on the use of capital add-ons by national competent authorities under Solvency II. The report examines the evolution of the usage of capital add-ons from 2016 to 2017, along with the evolution of the processes of each authority. The objective is to contribute to a higher degree of supervisory convergence in the use of capital add-ons between supervisory authorities in the different member states and to highlight any concerns regarding the capital add-ons framework.

The analysis is based on 2017 year-end Solvency II data, as reported by the undertakings and insurance groups via the Solvency II Quantitative Reporting Templates (QRTs) and an additional survey addressed to the national competent authorities from the 28 EU member states and three European economic area members. The report shows that a slight increase in the use of capital add-ons can be seen, although the overall usage remains extremely limited. During 2017, six national competent authorities have set capital add-ons to 23 solo insurance and reinsurance undertakings. This limited usage might be due to the negative image that is attributed to capital add-ons or to the level of judgment that is associated to the decision and calculation of the capital add-ons, which in turn inhibits supervisors from using it.

Even if the capital add-ons are not used often, when used, they have a material impact on the Solvency Capital Requirement (SCR) of some of the entities. The weight of capital add-ons ranges from a low of 1% to a high of 83%, with an average of 30% of the total SCR. The capital add-on seems to be a good and positive measure to adjust the SCR to the risks of the undertaking, when the application of other measures is not adequate—such as the development of an internal model—as in 18 cases the capital add-on was already set in 2016. 

 

Related Links

Keywords: Europe, EU, Insurance, Solvency II, Capital Add-ons, SCR, Quantitative Reporting Templates, EIOPA

Related Articles
News

EBA Single Rulebook Q&A: Fourth Update for March 2019

EBA published answers to five questions under the Single Rulebook question and answer (Q&A) updates for this week.

March 22, 2019 WebPage Regulatory News
News

ECB Updates Validation Checks and List of Identifiers Under AnaCredit

ECB updated the AnaCredit validation checks (Version 1.4) and the list of national identifiers (version 2.4) for AnaCredit reporting.

March 21, 2019 WebPage Regulatory News
News

BCBS Publishes Results of the Basel III Monitoring Exercise

BCBS published results of the Basel III monitoring exercise based on data as of June 30, 2018.

March 20, 2019 WebPage Regulatory News
News

EBA, FCA, and PRA Agree on MoU Template for Supervisory Cooperation

EBA, FCA, and PRA announced that they have agreed on a template for the Memorandum of Understanding (MoU) that sets out the expectations for supervisory cooperation and information-sharing arrangements between UK and EU/European Economic Area national authorities.

March 20, 2019 WebPage Regulatory News
News

HKMA Publishes CoP on Loss-Absorbing Capacity Requirements of Banks

HKMA issued, in relation to the Financial Institutions Resolution (Loss-Absorbing Capacity Requirements—Banking Sector) Rules (LAC Rules) a chapter of a code of practice (LAC CoP) under section 196 of the Financial Institutions Resolution Ordinance (FIRO).

March 20, 2019 WebPage Regulatory News
News

EBA Publishes Reports Monitoring the Implementation of Basel III in EU

EBA published two reports measuring the impact of implementing the final Basel III reforms and monitoring the implementation of liquidity measures in EU.

March 20, 2019 WebPage Regulatory News
News

BCBS Publishes Results of Survey on Proportionality in Bank Regulation

BCBS published a report presenting the results of a survey conducted on proportionality practices in bank regulation and supervision.

March 19, 2019 WebPage Regulatory News
News

US Agencies Adopt Interim Rule to Facilitate Transfers of Legacy Swaps

US Agencies (FCA, FDIC, FED, FHFA, and OCC) are adopting and inviting comments on an interim final rule.

March 19, 2019 WebPage Regulatory News
News

EBA Updates List of Other Systemically Important Institutions in EU

EBA updated the 2018 list of other systemically important institutions (O-SIIs) in EU. The list also reflects the additional capital buffers that the relevant authorities have set for the identified O-SIIs.

March 19, 2019 WebPage Regulatory News
News

HKMA Expects Banks to Manage Risks Related to Crypto-Asset Exposures

HKMA issued a statement announcing that it expects authorized institutions to take note of the BCBS statement on crypto-assets and its prudential expectations.

March 18, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2780