Are You Ready for Solvency II?

Solvency II, the comprehensive revision of insurance solvency regulations in the European Union (EU) that now is under way, will have far-reaching implications for insurers and reinsurers doing business in member countries. Insurers in the US that have subsidiaries in Europe will be affected, and regulators even are talking about requiring insurance groups with head offices outside the EU to set up a holding company in the EU. Solvency II will require both a quantitative and qualitative assessment of companies by the supervisors. For many, specific quantitative assessment of the capital requirement is a major change. Even companies with existing economic capital models may find that Solvency II uses different risk definitions, creating a potentially challenging reconciliation effort.