Archive for September, 2009
EU likely to water down Solvency II proposals
Draft European Union solvency rules that could force UK insurers to raise up to £50bn worth of capital are likely to be watered down.
According to Reuters UK, the Solvency II proposals, which have been heavily critisised by Britain’s leading annuity providers in particular, are now attracting criticism in continental Europe, increasing the probability they will be changed.
Next month, regulators from all 27 EU countries will meet in Berlin to agree on recommendations for final Solvency II legislation, which will be submitted to the European Commission early next year.
Further alterations are possible before final legislation is agreed in June 2011, but Reuters says British insurers are hopeful their concerns will be reflected in the regulators’ advice. Click here to read full article.
Insurers respond to proposed implementing measures
How level will the Solvency II playing field be?
Some in the UK fear the FSA will apply the directive more strictly than its continental counterparts. Will “harmonization” succeed? Jessica Baylis investigates.
The approval of the Solvency II directive by the European Parliament and Council earlier this year has been the signal for some UK insurers and their advisers to start finding fault with it. The recent heavy coverage in the press of the costs to the UK pensions industry of Solvency II has been the most prominent example of this. But critics have also attacked the way they perceive the directive as being applied. Click here to read full article.
Solvency II could slash pensions by 20% – UK insurer
UK – Legal & General (L&G) has repeated a warning that annuity levels for UK-based defined contribution pension scheme members in the UK could fall by up to a fifth, if Solvency II is enacted in its current form.
The warning follows claims from the Association of British Insurers suggesting the European directive would force UK insurers to raise an extra £50bn (€57.16bn) in equity, leading to a sharp increase in premium rates paid by policyholders. The claims were made in a letter sent by the ABI to Alistair Darling, chancellor of the exchequer, urging both him and the European Commission to intervene.
Tim Breedon, chief executive of L&G, last month claimed the rules were “a betrayal of savers”, and said retirement income from annuities could be slashed by a fifth as insurers are forced to increase capital reserves. Click here to read full article
CEA letter to CEIOPS on Solvency II implementing measures
The CEA has sent a letter to CEIOPS expressing strong concerns over CEIOPS’ draft advice on the implementing measures for Solvency II. The CEA is concerned that CEIOPS appears to have abandoned the principles-based and economic approach it originally adopted. CEA comments that the draft advice is characterised by a ’systemic injection of quantitative and qualitative elements of conservatism’. According to CEA a number of the proposed measures are inconsistent with the principles underlying the Framework Directive and inconsistent with the agreed fundamentals of the new regime. Click here to download this letter
