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March 18, 2019

EIOPA has requested the European Economic Area insurance undertakings, which are subject to Solvency II, to provide information on the long-term guarantee (LTG) measures. EIOPA requires this information for the preparation of the fourth LTG report, the opinion on LTG measures, and the review of Solvency II. The fourth LTG report of EIOPA is due in 2019 while the Solvency II review is due in 2020. EIOPA also updated the reporting template and technical specifications for the provision of this information.

Insurers are being requested to provide information on LTG measures, dynamic volatility adjustment, and long-term illiquid liabilities. The information to be provided on LTG measures includes impact of the extrapolation of risk-free interest rates on the financial position of undertakings, losses due to bond defaults and downgrades of bonds in matching adjustment portfolios, assets in matching adjustment portfolios, diversification effects in the calculation of the Solvency Capital Requirement when the matching adjustment is used, and overcompensation of the volatility adjustment.

National supervisory authorities will contact a representative sample of undertakings regarding the provision of information for each information request. Insurance undertakings should submit the completed reporting templates to the respective national supervisory authority. The templates should be filled according to the instructions in the technical specifications and taking into account the technical information. Insurance and reinsurance undertakings are requested to submit results to national supervisory authorities by May 17, 2019, whereas the deadline for insurance groups (for the dynamic volatility adjustment) is June 14, 2019. Deadline for national supervisory authorities to report to EIOPA (except group data) is May 29, 2019 while the deadline to report to EIOPA on groups is June 28, 2019.

The Solvency II Directive requires a review of the LTG measures and the measures on equity risk by January 01, 2021. The review will consist of the following phases:

  • EIOPA will provide annual reports on the impact of the application of the LTG measures and the measures on equity risk to the European Parliament, the Council of the EU, and the EC. 
  • EIOPA will submit an Opinion on the assessment of the application of the LTG measures and the measures on equity risk to EC in 2020.
  • Based on EIOPA's Opinion, EC will submit a report on the impact of the LTG measures and the measures on equity risk to the European Parliament and to the Council of the EU.


Related Links

Keywords: Europe, EU, Insurance, Solvency II, LTG Measures, SCR, Volatility Adjustment, EIOPA

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