ICS ‘could augment analysis of insurers’ capital’, Fitch argues

Written by Adam Cadle

10/05/2022

The Insurance Capital Standard (ICS) “could augment the analysis of insurers’ capital by serving as a comparator benchmark across geographies”, Fitch Ratings has said.

The standard, due to be implemented globally by 2025, aims to provide a globally comparable risk-based measure of the capital adequacy of Internationally Active Insurance Groups (IAIGs). Fitch said “in theory, it should improve comparability between groups that operate under different solvency regimes”.

It added: “However, it will only be effective if all major jurisdictions implement it consistently.” The ratings agency expects the ICS to be neutral for ratings as it is unlikely to replace the regulatory capital frameworks that apply to insurers, including IAIGs.

The ICS has been in development since 2013, as part of wider reforms to increase the resilience of the global financial system in the aftermath of the 2007–2008 financial crisis.

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