Solvency II Reporting and Disclosure

Tim O’Hanrahan

Overview

• What reports will be required? • What is in those reports? • Are the reports Public or Private? • Process

– Frequency – Submission Dates – Format – Sign-off/Audited

• Groups• Proportionality• Open Questions

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Important Note

• The presentation is based on a combination of the Directive, Draft Level 2 Implementing Measures and current early drafts of Level 3 Guidance.

• The resulting requirements will evolve and develop over time and all undertakings should keep up to date with developments.

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Art. 35 Supervisory reporting

Regular Supervisory Report (RSR)

-All information necessary for the purposes of supervision

-Narrative Report-Quantitative reporting templates

Solvency and Financial Condition Report (SFCR)

- Publicly disclosed data-Narrative Report

-Quantitative reporting templates

What reports will be required?

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What is in those reports?i) SFCR and ii) RSR

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Contents of SFCR and RSR

A) Business, External Environment and Performance

B) Governance and Remuneration Policy

C) Risk Profile

1. Business and external environment

2. Underwriting Performance

3. Investment Performance

4. Performance from other activities

1. Governance Arrangements

2. Fit and Proper3. Risk

Management & ORSA

4. Internal Control 5. Internal Audit 6. Actuarial 7. Outsourcing8. Any other

disclosures

Following risks1. Underwriting

Risk 2. Market3. Credit 4. Liquidity5. Operational 6. Other material

Risk Exposures7. Any other

disclosures

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Contents of SFCR and RSR

D) Valuation for Solvency Purposes

E) Capital Management

1. Assets2. Technical Provisions3. Other Liabilities4. Other Disclosures

1. Own Funds - structure, amount & quality

2. MCR and SCR3. SCR differences if

standard formula or internal model used

4. Non-compliance with SCR/MCR

5. Other Disclosures

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What do you disclose for Underwriting Performance?

SFCR (Public) RSR (Private)

1. The undertaking’s underwriting performance by material line of business and geographical area;

2. The undertaking’s underwriting expenses by material line of business and geographical area over the year and compared to the prior year.

1. A discussion and analysis by the administrative, management or supervisory body of the undertaking’s overall underwriting performance;

2. Details of the undertaking's underwriting performance by line of business against plan, and significant factors affecting deviations from plan;

3. Projections of the undertaking's underwriting performance over the business planning period with details of significant factors that might affect underwriting performance;

4. Details of any reinsurance, ART and finite reinsurance programmes purchased, including those currently not being claimed on.

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Contents of SFCR and RSR

And also... Quantitative forms

1. Current draft, 59 different forms!!!2. Including forms on:

• Profit and Loss Account• Balance Sheet• Off Balance Sheet• Solvency Capital Requirement• List of each investment held • List of each derivative • Technical Provisions• Risk Profile • Loss Profile

3. All forms will be reported annually, a subset will be reported every quarter.

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Example List of InvestmentsEach investment held with details such as:

1. Identification a) ID Codeb) Security Typec) Issuer Name, Sector, Country

2. Price & Quantitya) Priceb) Valuation Methodc) Cost

3. Risk Section a) External Ratingb) Rating Agencyc) Underlying of Securitisationd) Duration

Reporting required on other occasions?

• Predefined events– Predefined events are those that can lead to material

changes to an undertaking’s risk profile– May require supervisory authorities to reassess the

frequency and intensity of supervisory actions.

• Supervisory Enquiries – Supervisors may request any information required to

assess the situation of an undertaking

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Are the reports Public or Private?

Public Private for Supervisors

SFCR Yes

RSR No Yes

Predefined Events Yes for items such as non-compliance with MCR or significant non-compliance with SCR and no satisfactory action taken in required timeline

Yes

Supervisory Enquiry

Generally no but may give rise in certain circumstances to a public disclosure

Yes

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Process of Reporting

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Process of Reporting – Frequency and Submission Dates

SFCR RSR Quantitative Forms

Frequency Annual 1) Full report at least every 3 years or when required by Supervisors 2) Material Updates Annually

Quarterly and Annual

Submission Date

14* weeks after year end

14* weeks after year end

Quarterly 6* weeks after end. Annual 16* weeks after year end

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* There is a limited extension until 2015

Process of Reporting –Submission Dates

Due dates Year end 31/3/13 Year end 31/12/13

SFCR – Annual Narrative & Quantitative

Mid July 2013 April 2014

RSRNarrative & Quantitative

Quarterly Quantitative

Mid July 2013

Mid August 2013 for Q1 ended 30/6/13

April 2014

Mid May 2013 for Q1 ended 31/3/13

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Process of Reporting – Frequency and Submission Dates

SFCR RSR Quantitative Forms

Format Common Template as developed by CEIOPS

Common Template as developed by CEIOPS

Common Template as developed by CEIOPS

Sign off -internal – administrative or management body

Yes Yes Yes

Sign off – external auditing or verification

No No Yes to be developed

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Group reporting

Solvency and Financial Condition Report

Report to Supervisors

Quantitative Forms

Group Yes

Same as Single entity + additional requirements

Yes

Same as Solo + additional requirements

Yes

Same as Solo + additional requirements

Subsidiary Could include in Group report (subject to agreement) i.e. Subsidiary would not have to complete

Yes Yes

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Proportionality

How is Proportionality Demonstrated

Regular Supervisory Reporting (RSR)

Frequency of RSR is not required annually

Qualitative forms Qualitative reporting and disclosure requirements are principled based

Quantitative Forms You do not have to complete forms that are Not applicable

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Open Questions

• Audit requirements : scope ? level of assurance ?

• Public disclosure of some templates : which ones ?

• National specificities : content ? role of EIOPA ? Can local GAAP be used for Solvency II ?

• Proportionality : less requirements for small or less complex undertakings ? impact on comparability & aggregation of data ? “automaticity” of proportionality ?

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Overview

• What reports will be required • What is in those reports • Are the reports Public or Private • Process

– Frequency – Submission Dates – Format – Sign-off/Audited

• Groups• Proportionality• Open Questions

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Thank you