A.M. BestTV: Solvency II Reporting Sheds Additional Light on Insurers, Says A.M. Best Associate Director

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- In this ^A.M.BestTV episode, Anthony Silverman, associate director of analytics, A.M. Best, explains how Solvency II financial reporting reveals additional detail about insurers' solvency capital, non-life risk margins and unit-linked reserving practices. Click on http://www.ambest.com/v.asp?v=solvencyii718 to view the entire program.

“The non-life risk margins are part of the framework for looking at non-life reserving in Solvency II,” said Silverman. “They present the sort of trade-off to non-life insurers. The risk margins are a cost that reduces the capital available. … Overall, the risk margins, which turn out to be about 5% of the best estimate reserves, are probably more than offset by other factors.”

Silverman also discussed unit-linked liabilities and Solvency II's treatment of them.

“The Solvency II treatment of unit-linked liabilities is quite different from the financial reporting. Under International Financial Reporting Standards (IFRS), the reserve for unit-linked liabilities is in broad terms equal to the assets held. However, that is neutral or reserved for capital. The cash flow reserving treatment under Solvency II produces a contribution and element of Solvency II own funds. That contribution to capital is in the region of 3%-4% of unit-linked liabilities reserves.”

To access a copy of this special report, titled, “Solvency II - Available Capital Assisted By Unit-Linked and Non-Life”, visit http://www3.ambest.com/bestweek/purchase.asp?record_code=274715 .

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^A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View ^A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.