Solvabilité II : Point de l’ACPR sur les SFCR collectés en 2017

Qualité

D’une manière générale, l’information consultable par le public via les SFCR de la collecte 2017 apparaît perfectible pour les motifs suivants :

  • Des rapports souvent désincarnés et peu accessibles pour un public non averti.
  • Des informations qui ne reflètent pas suffisamment les caractéristiques de l’entité :
    • Une absence de description du « business model » de l’organisme.
    • Des parties (gouvernance, ORSA, activité, résultat d’exploitation et capacité bénéficiaire) se limitant à l’énoncé des contraintes réglementaires.
  • Manquent également dans certains rapports publics les informations sur la politique et les pratiques de rémunération (dont les régimes de retraite anticipée et complémentaire de l’organe de gouvernance de l’organisme ou groupe).
  • Les modalités d’accès des responsables de fonctions clé aux dirigeants effectifs ne sont pas toujours suffisamment décrites.

Surtout, les effets – souvent considérables – des mesures transitoires, « provisions techniques » ou VA notamment, sur la solvabilité des organismes mériteraient d’être davantage détaillés, notamment quant à leur impact sur la solvabilité des groupes concernés.

SFCR France

Conclusion et recommandations

  • Cette première publication démontre la capacité de l’ensemble du marché à délivrer une information globalement conforme aux attendus réglementaires.
  • Cela étant, ces premiers SFCR se caractérisent par une grande hétérogénéité dans le niveau de détail et la cohérence de l’information délivrée au public et ne permettent pas encore suffisamment au lecteur de saisir les principaux enjeux et choix méthodologiques des assureurs.
  • Le SFCR n’est donc pas encore uniformément l’instrument de discipline de marché souhaité à l’origine, tant du point de vue de la conformité générale que de l’appréciation qualitative.
  • Pour les collectes à venir, notamment la collecte 2018, l’ACPR identifie les pistes d’amélioration suivantes :
    • Une publication du SFCR et de ses annexes aisément accessible sur internet pour les assurés ;
    • Une piste d’audit des données utilisées et publiées pour assurer leur traçabilité du QRT au SFCR ;
    • Une rédaction simple et fiable, selon les modes usuels de la communication financière, qui permette d’appréhender le profil de risque de l’organisme et son degré de sensibilité ;
    • Une mise en perspective des résultats avec les performances passées et les perspectives futures ;
    • La mention explicite des effets des mesures transitoires sur la solvabilité des organismes qui en bénéficient directement (obligatoire) et indirectement (si matériel) ;
    • Et d’une manière générale, des descriptions qui, au-delà de la stricte énonciation des attendus réglementaires, permettent de comprendre l’activité, l’organisation, les résultats, la solvabilité et le modèle de développement de chaque organisme.

Cliquez ici pour accéder à la présentation détaillée de l’ACPR

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

Solvency II : First experiences with SFCR reporting – Germany, UK, Ireland

In May 2017, all German solo insurance companies were required for the first time to publish selected reporting forms as part of Solvency and Financial Condition Reporting (SFCR) – insurance groups followed at the end of June. These reports did not only include a huge amount of data on specific Solvency II risk figures but also comprehensive information about

  • general business development,
  • qualitative explanations on the presented figures and on the financial, solvency and business situation.

Aside from the obligation to publish own Solvency II results, insurance companies now for the first time have the opportunity to compare their Solvency II results with direct competitors.

The publication of SFCR reports also gives stakeholders access to Solvency II reports who did not have insight into these results before, for instance

  • rating agencies,
  • sales partners,
  • customers,
  • media
  • and creditors.

The extension of the target group has two main consequences for insurance companies:

  1. Firstly, Solvency II results need to be explained to an audience that has little experience with Solvency II – unlike insurance supervisors who had exclusive access to Solvency II results until now.
  2. Secondly, the solvency ratio becomes increasingly important as a material piece of information from SFC reports.

Due to the flood of information available in the SFC reports and the lack of experience of many market participants, it can be expected that processing Solvency II results will be mainly restricted to the evaluation of the solvency ratio as the core result of Solvency II. In particular, it was revealed that individual insurance companies are already actively using the solvency ratio in sales.

The attention given to the solvency ratio by the public will increase even further in the future if ratios approach the critical 100% threshold due to reduced interim measures.

Due to its increasing importance, the solvency ratio is no longer regarded as a pure reporting figure but as a value that requires active management. A variety of degrees of freedom and options in the calculation of Solvency II results allow insurance companies both to adjust their business policies and to influence SII results through suitable calculation methods. Due to the short history of Solvency II, there is little understanding of the impact mechanisms “behind” the solvency ratio at the moment, which is why not all optimization potentials are currently leveraged and insurers are still actively searching for solvency ratio levers.

In light of the extended information basis, decisions about

  • the use of interest rate measures,
  • an internal model (instead of the standard model),
  • simplified calculation methods
  • and the use of company-specific parameters

can be reassessed.

SFCR Germany

Click here to access Zeb Control’s detailed report

In a survey of the Solvency and Financial Condition Reports (SFCRs) and public Quantitative Reporting Templates (QRTs) for 100 of the top non-life insurers in the UK and Ireland the aim of the review was twofold – to analyse the numbers disclosed by firms for the first time and to consider how well firms have dealt with the narrative reporting required of them under Solvency II.

The survey team has also drawn upon our Pillar 3 roundtables with insurers and reinsurers across the market to understand how the first year of submissions has worked in practice.

Their key conclusions are:

  • Insurers are generally sufficiently capitalised, but the buffers firms have in place to protect against balance sheet volatility may not be enough to prevent them from having to recapitalise over the short term.
  • Motor insurers typically have the least financial headroom, compared with other insurers.
  • Brexit is on the agenda for many insurers, with some firms setting up internal steering groups to ensure they are well placed to access the European Market after the UK leaves the EU.
  • Uncertainty around the Ogden discount rate used to calculate personal injury compensation payments poses a material risk to some insurers, with two firms disclosing that the recent change required them to recapitalise significantly.
  • Firms must work harder to publish better quality QRTs, with over a quarter of the firms we reviewed disclosing QRTs containing obvious errors.
  • Some firms’ SFCRs are not fully compliant with the Solvency II regulations, with particular areas of weakness including disclosure around sensitivity testing of the SCR and uncertainty within technical provisions.

SFCR UK IRL

Click here to access LCP’s detailed survey analysis