DNB Consults on Treatment of Savings Mortgages Under Solvency II
DNB published a document for consultation on the treatment of "savings mortgages" under Solvency II. The document describes how Solvency II deals with different forms of savings mortgages at insurers. It also explains how an insurer values the savings mortgage obligation (the savings deposit), how an insurer values the savings mortgage if the insurer provides the interest-only mortgage loan, and the situation in which a lender has provided the mortgage loan. The deadline for submitting responses is December 01, 2020.
A savings mortgage consists of an interest-only mortgage loan and a savings deposit where the policyholder can save at the contractually agreed interest on the interest-only mortgage loan, to repay the mortgage loan at the end of the term, plus risk insurance. Collectively, the interest-only mortgage loan and the savings deposit form an annuity-declining mortgage loan from the perspective of the policyholder or borrower. Insurers have savings mortgages in various forms on their balance sheet. An important factor in this is the role of the lender if the insurer has not provided the interest-only mortgage loan and the insurer passes on the savings premiums to the lender. The contract between the lender and the insurer largely determines the risks for the insurer and, therefore, also the valuation and capital requirements of savings mortgages. The document for consultation does not deal with the treatment of the risk insurance often associated with the savings mortgage. This document also does not address the consequences of savings mortgages for the resolvability of insurers, as DNB assesses in its resolution plans.
Related Links (in Dutch)
Comment Due Date: December 01, 2020
Keywords: Europe, Netherlands, Insurance, Solvency II, Savings Mortgage, Mortgage Loans, Regulatory Capital, DNB
Featured Experts
Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist
Cassandra Hannibal
Life insurance actuary; risk management and economic capital specialist
Jerome Ogrodzki
Insurance asset and liabilities modeling specialist; stochastic modeling expert
Previous Article
US Agencies Finalize Rule to Reduce Impact of Large Bank FailuresRelated Articles
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
SNB Updates NSFR Forms and FINMA Consults on Operational Risk Circular
The Swiss National Bank (SNB) published Version 1.2 of the reporting forms (NSFR_G and NSFR_P) on the net stable funding ratio (NSFR) of banks, along with the associated documentation.
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
