March 08, 2019

EC adopted a delegated regulation that amends the Regulation (EU) 2015/35, which supplements the Solvency II Directive (2009/138/EC) on the taking-up and pursuit of the business of insurance and reinsurance. EC adopted the new rules to help insurers to invest in equity and private debt and to provide long-term capital financing. The amendments will now be subject to a three-month scrutiny by the European Parliament and the Council. The delegated regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Based on expert advice from EIOPA and in-depth analyses by EC, the delegated act lowers the capital requirements for insurers' investments in equity and private debt, also aligning the rules applicable to banks and insurers. The amendments change various aspects of the Solvency II implementing rules, including the following:

  • Introduced simplifications in the calculation of capital requirements
  • Improved alignment between the insurance and banking prudential legislation
  • Updated principles and standard parameters to better reflect developments in risk management and the most recent data (including a better treatment of financial hedging strategies)
  • Corrected a number of drafting errors throughout the Solvency II Delegated Regulation
  • Further refined the recognition of risk-mitigation techniques, the group solvency calculation, and the volume measure for non-life premium risk, thus improving the risk-sensitivity of the capital requirement standard formula while better reflecting developments in market practices

The insurance industry is well-equipped to provide long-term finance by investing in equity and private debt, including of small and medium enterprises (SMEs); however, the actual share of their investments in the real economy remains limited. As a result of the new rules, insurers will have to hold less capital for such investments and will, therefore, find it more attractive to invest in the economy. This will further help mobilize private-sector investment which is a key objective of the Capital Markets Union.

 

Related Links

Effective Date: OJ + 20 Days

Keywords: Europe, EU, Insurance, Securities, Solvency II, Reinsurance, Regulation 2015/35, Capital Requirements, Capital Markets Union, EIOPA, EC

Related Articles
News

FSB to Evaluate Effects of Too-Big-To-Fail Reforms for Systemic Banks

FSB is seeking feedback as part of its evaluation of the effects of the too-big-to-fail reforms for banks.

May 23, 2019 WebPage Regulatory News
News

APRA Releases Minor Changes to Reporting Standards on SA-CCR for Banks

APRA released minor changes to the three reporting standards for the standardized approach for measuring counterparty credit risk exposures (SA-CCR).

May 22, 2019 WebPage Regulatory News
News

APRA on Industry Self-Assessments into Governance and Accountability

APRA released an information paper analyzing the self-assessments performed by 36 of the country’s largest banks, insurers, and superannuation licensees in response to the final report on the Prudential Inquiry into the Commonwealth Bank of Australia (CBA).

May 22, 2019 WebPage Regulatory News
News

PRA Consults on Maintenance of TMTP Under Solvency II

PRA published a consultation paper (CP11/19) that sets out its approach to update supervisory statement (SS6/16) on maintenance of the transitional measure on technical provisions (TMTP) under Solvency II.

May 22, 2019 WebPage Regulatory News
News

APRA Proposes to Amend Guidance on Residential Mortgage Lending

APRA is consulting on revisions to the prudential practice guide APG 223 on residential mortgage lending in Australia.

May 21, 2019 WebPage Regulatory News
News

IASB Proposes Improvements to IFRS 9 and IFRS 16

IASB published the exposure draft ED 2019/2 that proposes amendments to four IFRS standards, including IFRS 9 on Financial Instruments and IFRS 16 on Leases.

May 21, 2019 WebPage Regulatory News
News

Denis Beau of BDF on Supervisory Priorities for Climate-Change Risks

Denis Beau, the First Deputy Governor of BDF, delivered opening remarks at the BCBS-BSCEE-FSI High-level Meeting for Europe on banking supervision.

May 21, 2019 WebPage Regulatory News
News

ISDA CDM to be Deployed for UK Digital Regulatory Reporting Pilot

ISDA announced deployment of the ISDA Common Domain Model (ISDA CDM 2.0) to support the UK FCA, BoE, and participating financial institutions in testing phase two of the Digital Regulatory Reporting pilot for derivatives.

May 21, 2019 WebPage Regulatory News
News

MAS to Consolidate Regulation of Merchant Banks Under Banking Act

MAS published a consultation paper that proposes to consolidate the regulation of merchant banks under the Banking Act and to move merchant banks to a licensing regime under the MAS Act.

May 21, 2019 WebPage Regulatory News
News

ESAs Amend Technical Standards on Mapping of ECAIs Under CRR

ESAs published a second amendment to the implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR).

May 20, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3118