Insurance Quarterly Legislative Update 1 Jan 2017 - 31 March 2017

Author:Dillon Eustace
Profession:Dillon Eustace
 
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INSURANCE QUARTERLY LEGAL AND REGULATORY UPDATE

Solvency II

(i) EIOPA publishes monthly symmetric adjustment of the equity capital charge

On a monthly basis, EIOPA updates information on the symmetric adjustment of the equity capital charge. The symmetric adjustment to the equity capital charge shall be included in the calculation of the equity risk sub-module in accordance with the Solvency Capital Requirement (the "SCR") standard formula to cover the risk arising from changes in the level of equity prices. This adjustment is regulated mainly in Article 106 of the Solvency II Directive (2009/138/EC); Article 172 of the Solvency II Delegated Act (2015/35/EU) as well as in the Implementing Technical Standards on the equity index for the symmetric adjustment of the equity capital charge (Commission Implementing Regulation 2015/2016/EU).

EIOPA published the technical information on the symmetric adjustment of the equity capital charge for Solvency II as follows:

With reference to the end of December 2016 on 9 January 2017; With reference to the end of January 2017 on 7 February 2017; and With reference to the end of February 2017 on 7 March 2017. The monthly symmetric adjustment of the equity capital charge can be accessed via the following link:

https://eiopa.europa.eu/regulation-supervision/insurance/solvency-ii-technical-information/symmetric-adjustment-of-the-equity-capital-charge

(ii) EIOPA publishes updated technical methodology documentation for the risk-free interest rate term structures for Solvency II

During Quarter 1, EIOPA published updates to the technical documentation of the methodology to derive EIOPA's risk-free interest rate term structures ("RFR") for Solvency II (the "RFR Updates").

Under Solvency II, the RFR underpins the calculation of liabilities by insurance and reinsurance undertakings. EIOPA is required to publish the RFR.

The RFR technical methodology documentation aims to assist users in complying with their obligations under the Solvency II Directive by explaining in a transparent manner how the relevant RFRs are derived. It is published to achieve a consistent calculation of technical provisions. EIOPA notes that it does not constitute legal advice.

The RFR Updates during the Quarter include:

In January 2017, the update includes the following changes:

The use of the input data for the derivation of the risk-free interest rates for the Mexican peso was aligned with the maturity of the underlying financial instruments. The peer country...

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