SOLVENCY II NEWS

1
Solvency II Are We There Yet?

• December 2010 presentation by
• Claude Penland, Associate of the Casualty
  Actuarial Society
• www.ClaudePenland.com

2
What is Solvency II?

• Solvency II is the updated set of regulatory
  requirements for insurance firms that operate in
  the European Union.
• See Wikipedia at http//en.wikipedia.org/wiki/Solv
  ency_II
• More info at www.SolvencyDeux.com

3
Solvency II Side Effects, Part One

• Insurers might need to outsource their asset
  management http//bit.ly/aeaqhy
• Stock portfolios sold off http//bit.ly/cZ56br
• Captives might need to be run off
  http//bit.ly/cYq7w4
• Specialist employee costs are being jacked up
  http//bit.ly/9Mt0J0
• Not enough regulators with experience
  http//bit.ly/a7i21O

4
Solvency II Side Effects, Part Two

• International Financial Reporting Standards and
  Solvency II hit companies twice and from
  different angles http//bit.ly/9awkgy
• Demand for bonds may be driven artificially high
  (and yields low) due to dumping of equities and
  buying of bonds http//bit.ly/bu3YM3
• Cost overruns http//bit.ly/cr4tPt

5
Is Catastrophe Risk Appropriately Represented?

• Mega Broker says no http//bit.ly/cHHoGz
• Aon Benfield says no http//bit.ly/9Dbgt3
• Perils says thats a mighty big catastrophe that
  insurers are expected to be prepared for
  http//bit.ly/9UENg2

6
Solvency II Committees

• Ironically, they say they must now simplify the
  plans theyve charted.
• Read more at http//www.claudepenland.com/2010/11/
  30/more-solvency-ii-hand-wringing-coming-out-of-eu
  ropean-mouths/

7
European Pensions

• Pension Funds Insurers disagree.
• Pension Funds dont want to be regulated by
  Solvency II.
• Insurers say what is good for the goose is good
  for the gander.
• Read more at http//www.claudepenland.com/2010/12/
  01/european-insurers-versus-european-pension-funds
  -who-will-win-the-solvency-ii-argument/

8
Final Points

• Most recent Solvency II test results might be
  released in March 2011 http//bit.ly/aZZF3z
• Japan, Switzerland and Bermuda are going through
  equivalency tests http//bit.ly/cnA5v1
• Expect MA http//bit.ly/ae75Yk
• Expect Redomiciles http//bit.ly/bnhumt