TBR13 presentation v8.2.pptx - International Actuarial Association

59 Pages·2012·1.17 MB·English

Product Strategies under
Solvency II and IFRS 4
Phase II
TzePing Chng
Thomas Tang
Ernst & Young
Session Number: TBR13
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Why is this relevant in Asia?
Implementing Solvency II along with local solvency requirements
►The levels of regulation sophistication and the appetite for Solvency II vary
among Asian markets
2
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Agenda
Overview of Solvency II
►
Strategic and Commercial Implications -Products
►
Product impacts
►
Key product issues
►
Simplified case study
►
IFRS 4 Phase II … comparing to Solvency II
►
3
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Overview of
Solvency II
4
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Part of an Evolution
Tendency towards market consistency and risk awareness
Solvency II
IFRS 4 Ph2 MCEV
d
e
s
a
b
Solvency I EEV

k
s
i
R
Traditional
insurance
accounting
Value based
5
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Quick overview of Solvency II
The new Europe-wide framework for prudential supervision of
►
insurance companies
Increase the level of European harmonization in the solvency regime
►
Aim of Solvency II is to link the required capital of insurance
►
companies more closely to the risk profile of insurance companies
Principles based but more prescriptive than IFRS
►
Market consistent approach for valuing assets and liabilities
►
Capital requirements linked to risk profile
►
Major focus on risk management
►
Significant disclosure requirements
►
6
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Quick overview of Solvency II
Three pillar structure
Pillar I Pillar II Pillar III
Technical Own risk and Disclosure-
provisions solvency solvency and
assessment financial
(ORSA) condition report
MCR
Internal model Market
minimum capital
discipline
requirement
SCR Supervisory
solvency capital powers and
requirement processes
7
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Pillar 1
Capital requirements and market value balance sheet
Solvency I framework Solvency II framework
Statutory balance Solvency II balance
sheet sheet
Asset Liability Asset Liability
Free surplus
Free surplus
Explicit
prudence margin
Implicit Solvency I in minimum SCR
prudence in capital
MCR
technical requirement and
reserves and solvency capital
Risk margin
assets requirement
Technical
provisions
Best
estimate
reserves
(including
TVOG)
8
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Pillar 2
Expectations on firms
Directive expects Firms to
►
Conditions: Fitness and Internal Control
Propriety
address and have in place six
Outsourcing
key “aspects” of governance
based on conditions and
functions:
Risk
Functions: Internal Audit Actuarial Management
Function Function Function
Pillar 2 requires firms to undertake an Own Risk and Solvency
►
Assessment (ORSA)
In addition to these requirements on firms, Pillar 2 also includes
►
provisions for Supervisory review and action
9
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/
Pillar 3
Reporting
Supervisory Reporting and Public Disclosure Requirements
CEIOPS Final Advice Doc 50/09 (former CP 58/09)
Public Private
Solvencyand Financial Report to Supervisors
Condition Report (RTS)
(SFCR)
Public Confidential
Factual Future-oriented
Greater detail
Quantitative templates
Audit considerations
10
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong
www.actuaries.org/HongKong2012/