SII 2020 review could impact life insurers' solvency ratios by more than 100pp

Written by Adam Cadle

14/01/2020

Life insurers' Solvency II ratios could be impacted by more than 100 percentage points, as the industry gears up for the 2020 review of the European regulation, according to S&P Global Ratings.

In October 2019, EIOPA published an almost 900-page consultation paper with updated suggestions for almost all Solvency II aspects following a request from the EC. Taking the interest rate stress, the last liquid point (LLP) and the volatility adjustment (VA) all in to account, S&P analyst Sebastian Dany stated that life insurers with long-term guaranteed liabilities could be affected most, particularly in Germany, The Netherlands, and the Nordic countries.

Re/insurers in general could see their Solvency II ratio impacted between 30 and 70 percentage points.

S&P stated that the ultra-low interest environment could exacerbate the impact of EIOPA's proposals.

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