Solvency II Reporting Services for Investment Funds

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Solvency II Reporting Services for Investment Funds

Deloitte’s integrated solution servicing world-class asset managers

Solvency II (Directive 2009/138/EC) is a European reform applicable to insurance and reinsurance undertakings which came into effect on 1 January 2016.

What is Solvency II?

Consistent with other financial services legislation such as the Basel III framework for banking supervision, Solvency II is a regulatory framework applying to European insurance and reinsurance undertakings. The regulation intends to offer these undertakings incentives to better measure and manage their risk situation - i.e. lower Solvency Capital Requirements (“SCR”), lower pricing - and to implement appropriate risk management systems and sound internal controls. This framework is organised in 3 pillars: Pillar I focuses on SCR, Pillar II focuses on governance and supervision, while Pillar III focuses on disclosures and supervisory reporting.

SOLVENCY II FRAMEWORK

PILLAR I

Capital requirements

Assets & liabilities valuation

Technical provisions

Own funds

Solvency capital requirements

Minimum capital requirements

Investment rules

PILLAR II

Governance & supervision

Governance system

Supervision review

Groups control

PILLAR III

Disclosures

Public information

Supervision reporting

Legend:

Impact for Asset Managers & Asset Servicers

Impact only for Insurance Undertakings

  • Asset Managers must be able to provide insurance undertakings with accurate information to permit calculation of the various SCRs
  • Asset Managers should define clear investment policies including sought hedging techniques
  • Data governance should be defined to ensure the quality of the sourcing
  • All processes should be documented and readily available in case the regulator requests an on-site inspection
  • Own Risk and Solvency Assessment (ORSA)
  • Asset Managers should provide insurance undertakings with relevant information required for the Quantitative Reporting Templates (QRT & annual disclosure)
  • All reports are submitted to the regulator by the insurance undertaking
  • The final reports might be audited

Solvency II for Asset Managers: Key challenges

Insurance companies delegate a large part of their asset management and therefore rely on the asset management industry to provide them with the input data necessary to fulfil their regulatory obligations. In order to support insurance companies in their SCR Market calculation and QRT delivery, various industry associations across different member states agreed on a Standardized EU template, the Tripartite template (“TPT”). The TPT supports investment management companies by providing a standardized way to exchange data between them and insurers. The investment fund industry is facing four main challenges in meeting the Solvency II reporting requirements: Flexibility and timing, regulatory, data management and processing.

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Solvency II Challenges

Deloitte Solvency II Reporting services for Investment Funds: Our offer

Deloitte has developed a one-stop-shop solution to assist asset managers with their Solvency II reporting:

  • To help asset managers leveraging on their data to meet their investors’ requests,
  • To produce analytics reporting to their insurance clients, and,
  • To provide advisory services in the structuring of their investment products.
XLSX - 18kb
Deloitte "One Stop Shop" solution servicing world class asset managers

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Contacts

Xavier Zaegel, FRM

Xavier Zaegel, FRM

Partner | Capital Markets/Financial Risk Leader

Xavier is a partner within the advisory and consulting department and is the head of the Capital Markets practice in Luxembourg. As a market and credit risk specialist, he has been leading various ass... More

Sylvain Crépin, FRM

Sylvain Crépin, FRM

Partner | Capital Markets/Financial Risk

Sylvain Crepin joined Deloitte Luxembourg in January 2012 and is Partner in the Financial Risk Management department. He is specialised in risk management advisory and solutions for the investment fun... More