Peter Ott, European Head of Solvency II at KPMG, welcomed today’s adoption of the draft delegated acts by the Commission:
“This is the most important missing piece of the puzzle. Although there is still scope for change during the review process, we have finally reached the position that every insurer in Europe will now have the same draft, ending months of secrecy and confusion.”
Janine Hawes, insurance regulatory leader at KPMG, added:
“The most significant change since the July draft relates to the capital charges under the standard formula for securitised assets. These reduced significantly from those set out in the July draft, which were already much lower than the figures originally proposed by EIOPA. The revised rules aim to better reflect the underlying risks, taking account of the seniority of the tranche and the quality of the underlying assets. For senior tranches, the charges are now more aligned to the charges that would apply were the underlying loans held directly.
“This move will help allay concerns that high capital charges could deter insurers from investing in longer-term investments, which is much needed to enable European growth and create jobs. However, insurers choosing to invest in these assets will still need to be able to demonstrate that they meet the prudent person principles, including the ability to properly identify, measure, monitor, manage, control and report the underlying risks.
“This now opens the no-objection review period for the European Parliament and the Council. This means the delegated acts should be finalised by 9 January 2015, although if either party evokes their extension option, this would mean 9 April. As the acts are made through regulation, there is no requirement for them to be transposed into Member State legislation.
“Once this has been approved and the date confirmed, insurers will finally have the clarity they need to understand what they’re dealing with and prepare.”
|
