EC Rule on Calculating Technical Provisions for Solvency II Reporting

By Regulatory News

February 08, 2019

Solvency II, Regulatory Reporting: EU

EC published the Implementing Regulation (EU) 2019/228 that lays down technical information for calculation of technical provisions and basic own funds for reporting with reference dates from December 31, 2018 until March 30, 2019, in accordance with the Solvency II Directive (2009/138/EC). This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. It shall apply from December 31, 2018.

Insurance and reinsurance undertakings shall use the technical information provided in the Annexes to this regulation when calculating technical provisions and basic own funds for reporting with reference dates from December 31, 2018 until March 30, 2019. For each relevant currency, the technical information used to calculate the best estimate in accordance with Article 77 of Solvency II Directive, the matching adjustment in accordance with Article 77c of that Directive and the volatility adjustment in accordance with Article 77d of that Directive shall be the following:

The relevant risk-free rate term structures set out in Annex I
The fundamental spreads for the calculation of the matching adjustment set out in Annex II
For each relevant national insurance market, the volatility adjustments set out in Annex III

To ensure uniform conditions for the calculation of technical provisions and basic own funds by insurance and reinsurance undertakings for the purpose of Directive 2009/138/EC, technical information on relevant risk-free interest rate term structures, fundamental spreads for the calculation of the matching adjustment, and volatility adjustments should be laid down for every reference date. Insurance and re-insurance undertakings should use the technical information, which is based on market data related to the end of the last month preceding the first reporting reference date to which this Regulation applies. On January 09, 2019, EIOPA provided EC with the technical information related to end of December 2018 market data. Given the need for the immediate availability of the technical information, it is important that this Regulation enters into force as a matter of urgency. For prudential reasons it is necessary that insurance and reinsurance undertakings use the same technical information for calculating technical provisions and basic own funds irrespective of the date on which they report to their competent authorities. This Regulation should, therefore, apply from the first reporting reference date to which this Regulation applies.

Related Link: Regulation (EU) 2019/228

Effective Date: February 09, 2019

Keywords: Europe, EU, Insurance, Solvency II, Own Funds, Reporting, Matching Adjustment, Volatility Adjustment, Regulation 2019/228, EC

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