Session 7 – Pillar 3: Transparency versus Confidentiality Conferencia Anual ASSAL-IAIS 2016 Rio de Janeiro, 19 April 2016

2 Key messages Significant requirements for public disclosure under Solvency II oPrincipal means is solvency and financial condition report oMarket consistency is at its heart Information exchange: colleges of supervisors and professional secrecy requirements

Disclosure

4 Market consistency

5 Disclosure: the principles All undertakings and groups have to disclose on an annual basis a report on their solvency and financial condition (SFCR or Group SFCR) The SFCR shall be subject to approval by the Executive Board (AMSB) and be published only after that approval No exemptions on disclosure Required to be oClear and concise oUnderstandable to policy holders and beneficiaries oShall highlight any material changes over the period

6 Disclosure: capital What will be disclosed? oValuation for solvency purposes oCapital management Own funds: excess of assets over liabilities, eligible own funds, ancillary own funds… What disclosure can you expect? oSolvency ratio of OF/SCR% [e.g. 180%] oSurplus: OF minus SCR

7 Long term guarantees measures: matching adjustment MA = risk-corrected spread of the insurer’s assets Requirements: oSupervisory approval oCash-flow matching between assets and liabilities oPredictable cash-flows oSeparation of assets and liabilities subject to the MA. Insurers will disclose description of the matching adjustment, description of assets and liabilities and also the financial position without MA.

8 Long term guarantees measures: transitional measures Two transitional measures ‒ insurers can apply Solvency I valuation approach to: oDiscount rates oAmount of technical provisions Transitionals apply only to contracts concluded before Phase-in of Solvency II valuation approach over 16 years Phase-in plan if SCR not met without transitionals: realistic plan how to meet SCR at end of transitional period Transitional will be withdrawn if phase-in plan becomes unrealistic. Insurers will disclose also financial position without transitional.

9 Disclosure: system of governance What will be disclosed? oSystem of governance oGovernance structure, description of risk management system and internal control systems and how the key functions are implemented oInformation on the remuneration policy and practices regarding AMSB oFit and proper policies oORSA: including statement explaining how undertaking has determined its own solvency needs given its risk profile oOutsourcing policies

Information exchange

11 Benefits of exchange of information The sharing of confidential information at colleges facilitates: oA consistent view of all college members on the group’s and the subsidiaries’ risk and financial position oA consistent positioning of supervisor towards mostly centrally managed groups oEffectiveness of the college work

12 Information exchange via colleges of supervisors Platform for cooperation and coordination for cross-border operating groups Information exchange Common understanding of risks Enhance risk-based group and solo supervision Promote convergence, effectiveness and efficiency of supervisory practices College members: EEA-based group and solo supervisors and EIOPA College participants: EEA-based solo supervisors of branches and supervisors of 3rd country undertakings

13 Duties concerning professional secrecy EEA based supervisors and EIOPA are subject to consistent “professional secrecy and confidentiality provisions” EIOPA’s Rules on Professional Secrecy and Confidentiality comprise requirements on professional secrecy (also after the duties have ceased) as well as on the use and disclosure of confidential documents. EIOPA considers professional secrecy a pre- condition to be met by any third country to be in order to be considered equivalent in relation to Solvency II (art. 172, 227 and/or 260).

14 Practice dilemmas EIOPA’s and other EEA college members’ right to have access to confidential information and data in order to fulfil its task is acknowledged….. ….but the scope and detail of information and data needed for this purpose leaves room for interpretation in some countries Consequence: Differences in level of information exchange in the colleges (stress test, QIS 5 results)

Thank you Justin Wray Head of Policy Unit EIOPA phone: