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December 21, 2017

EIOPA published its second annual report 2017 on Long-Term Guarantee (LTG) measures and measures on equity risk. This report analyzes the impact of measures on the financial position of all (re)insurance undertakings from the European Economic Area. The analysis included the impact of the extrapolation of risk-free interest rates and of the symmetric adjustment mechanism to the equity risk charge. The Solvency II Directive requires a review of the LTG measures and the measures on equity risk by January 01, 2021.

The annual report contains four main sections. The first section provides introductory information on the legal background of the review of the LTG measures and measures on equity risk as well as on the data used for this report, also concluding with a summary on the European insurance market. The second section captures the overall impact of the LTG measures and measures on equity risk on the financial position of the undertakings; the impact on policyholder protection; the impact on investments; the impact on consumer protection and availability of products; the impact on competition and level playing field in the EU insurance market; and the impact on financial stability. The third section of the report details the impact of each measure. The fourth section (thematic focus) is focused on the public disclosure on LTG measures and measures on equity risk. 

EIOPA also assessed stakeholder perception about the relevance, comprehensibility, completeness, and comparability of the information on the measures disclosed by (re)insurance undertakings. The outcome highlights the importance of the transparency on the use and impact of the measures as well as their preference for disclosure of additional information. EIOPA plans to submit an opinion on the assessment of the application of the LTG measures and the measures on equity risk to EC in 2020, which will be based on the annual reports submitted by then. EIOPA has submitted this second annual report to the European Parliament, the Council of the European Union, and the EC. 

 

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Keywords: Europe, Insurance, Solvency II, LTG, Equity Risk, Annual Report, EIOPA

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