Talk of Vesa Ronkainen on Solvency II

30th November, 2006 Vesa Ronkainen, research actuary in the Finnish insurance supervisory authority, was invited in the Finance Academy to deliver a talk "Solvency II framework for insurance supervision". Mr. Ronkainen has been following Solvency II actively for many years both in Finland and internationally (in the European Commission and in the CEIOPS' and IAIS' working groups). He has also contributed to a number of articles and conferences on Solvency II. Formerly he has worked for several Finnish insurance companies.

Solvency II is a wide scope of problems in diverse fields, including actuarial, which arose in EU when amendments to the financial solvency rules of insurers and new approaches in insurance regulation were aimed at. On the one hand, this program comes from new trends in banking regulation (e.g., Basel II program) and in insurance accounting (e.g., IFRS). On the other hand, it is designed to amend the most serious drawbacks of the current insurance
regulation (regulation standards currently in use are known under the name of Solvency I) . From the actuarial premises, Solvency II program requires more insight into modelling of the insurance process.



The talk comprised four main parts:

1. Background.
Contents of this part is:

- Solvency I
- Solvency II process
- Three pillar structure of Solvency II

 Presentation: [ Part 1 ]

2. Pillar I (quantitative requirements).
The agenda of this part is:

- Possible structure of the new solvency regime
- Solvency II and IASB
- Current approach to liability valuation (technical provisions)
- Solvency II approach to liability valuation
- Interaction between assets and liabilities (ALM)
- Solvency capital requirement (SCR)
- Adjusted solvency capital requirements (ASCR)
- Internal models for SCR
- Minimum capital requirements (MCR)
- Eligible capital
- Safety measures
- Pillar I interaction with pillars II and III

 Presentation: [ Part 2 ]

3.Other pillars.
The topics of this part were:

- Pillar II
- Pillar III
- Group and cross-sectional issues

 Presentation:  [ Part 3 ]

4. Quantitative impact studies.
This part contains discussion of QIS2 exercise - the main results and References for Solvency II

 Presentation:  [ Part 4 ]         

 A Solvency II glossary:  http://www.gcactuaries.org/documents/sol2_glossary_final_160307.pdf     [ file]