EIOPA’s Supervisory Statement Solvency II: Solvency and Financial Condition Report

  • The majority of insurance undertakings and groups published the (Solo/Group) SFCR on a timely basis and generally complied with the relevant Solvency II requirements. In some cases Groups went the extra mile to make the Group SFCR accessible to all stakeholders: The SFCRs are generally easy to find in the websites of most of the disclosing entities. However, some undertakings still do not own a website. In the websites of the insurance groups, in general, in addition to the Group SFCR, the solo SFCRs of the major entities of the group are also available at the same address and versions in English are available which facilitates access regarding the full group. The reports follow the structure as of Annex XX of the Delegated Regulation, but for non-applicable items, it is important to have a clear indication that the information is not applicable.
  • The use of different language styles and different formats to disclose SFCR information makes difficult the definition of a common disclosure approach to all types of stakeholders: EIOPA expects that care is taken when deciding the content and language style of the SFCR and in particular of the Summary of the SFCR. The Summary is the part of the SFCR that will most interest the policyholders. They should be the main addressees of this part of the Report. In the remaining sections of the SFCR it is not expected that the full content of EU or national legislation is reproduced in the SFCR. The Report should instead include relevant undertaking-specific information under each section to make it easy to efficiently identify and read the relevant specific information.
  • The need for a more fit-for-purpose ‘Summary’: EIOPA encourages insurance groups/undertakings to improve the content and clarity of the Summary. The SFCR Summary should encompass relevant SFCR areas and briefly provide relevant information. Given the importance of the SFCR Summary for the policyholders and the range of different approaches EIOPA clarifies the expectations on its minimum content from a supervisory perspective.
  • Quantitative Reporting Templates (QRTs) in the context of the SFCR: The placement of QRTs in an Annex to the SFCR, although a good practice, should not prevent undertakings/groups from providing quantitative and qualitative information into the body of the SFCR. Relevant information covered by the QRTs and additional information not covered by the QRTs in the Annex to the SFCR, such as background information that allows the reader to understand the information in the templates should be included in SFCR. If appropriate, parts of the QRTs should be repeated, or complemented through the narrative information of the SFCR.
  • Information on the own-risk and solvency assessment (ORSA) under the SFCR is by its very nature undertaking/group specific. This means that undertaking/group specific information needs to be included, even when referring only to the process and not to the outcome: The information disclosed should go beyond repeating the laws, regulations and administrative provisions on how the ORSA needs to be integrated into the organisational structure and decision making process.
  • The information on the risk sensitivity to different scenarios or stresses, should be better structured and more comprehensive: The information regarding the SCR and risk sensitivity is not comparable across different undertakings/groups. It is expected that the reporting of sensitivities to different scenarios or stresses is disclosed in a more structured format. The sensitivity to the different risks should be shown under the section ‘Risk Profile’. In addition under each risk section information on the overall impact should be provided.
  • Information on the bases, methods and main assumptions used for the valuation for solvency purposes should include undertaking/group specific information and address the uncertainties around the valuation: the SFCR should include more relevant, undertaking/group specific information, in particular regarding valuation of investments, valuation of deferred tax assets and deferred tax liabilities and valuation of technical provisions. Regarding the later the SFCR should provide a description of the level of uncertainty, by linking it at least to the assumptions underlying the calculation, such as economic and non-economic assumptions, expected profits in future premiums, future management actions and future policyholder behaviour.
  • Information on eligible own funds: EIOPA encourages undertakings/groups to disclose information about the management of the own funds in the context of the undertaking’s/group’s strategy and business model, including information on the time horizon used for business planning and on any material changes over the reporting period. The information of the eligible own-funds items, classified by tiers should be complemented by explanations of the most material own-funds items, including the extent to which they are available, subordinated, as well as their duration and any other feature that is relevant for assessing their quality.
  • In next year’s SFCR undertakings/groups should also include comparative information in certain areas of the SFCR. EIOPA expects that when providing comparative information the format of tables is used as much as possible in the narrative part of the SFCR. These tables could include amounts for both reporting years or focus on the material differences between both reporting years. Qualitative information on material differences between two reporting years are also expected to be included in the report. Publication of QRTs for current and the previous reporting year as an Annex alone is not sufficient to be considered compliant with the comparison requirement.


Click here to access EIOPA’s SFCR report