Gideon Benari, Editor, Solvency II Wire
Look-through reporting for assets under Solvency II is set to impact not only the relationship between insurers and supervisors but also that of insurers and asset managers.
The increase in detail and frequency of reporting on one hand, and shortening of delivery timetables on the other, will demand closer interaction and understanding between all parties concerned. A number of unresolved questions remain about data validation, information ownership and cost. The ensuing lack of clarity is adding to the uncertainty and anxiety of insurers and asset managers.
This written symposium seeks to address some of these questions by bringing together three experts to debate the subject in a series of articles. Over the coming weeks Carlos Montalvo, Executive Director, EIOPA, Oliver Bäte, Chief Financial Office, Allianz SE and Dr Nathalie Aubry-Stacey, Director – Market Practice and Regulatory Policy Department, International Capital Market Association (ICMA), will each present their views on the subject. Each participant will then have an opportunity to respond and propose ways of moving forward.
By choosing to narrow in on a specific part of the reporting requirements the symposium will facilitate a deeper understanding of the challenges facing the regulator and the industry and explore ways that they can be overcome.
Solvency II Reporting objectives
The Solvency II framework aims to harmonise and align supervisory requirements across Europe. Regulators believe that harmonisation will promote a better functioning of the Single Market and will reduce costs significantly for insurance entities operating across several Member States. The main objective of the Solvency II reporting requirements is to collect data for supervisory purposes and, at the same time, to create a system that will not be too burdensome for small and less complex insurance undertakings. They should also ensure that sufficient and clear information is provided to the public and that this information is not misleading. The new requirements aim to promote transparency, simplicity and fairness in the market for consumer financial products and services across the European Union.
A single template
For the past two years EIOPA has been working intensively on the reporting requirements with the aim to establish a harmonised, effective and efficient reporting system. The harmonised Solvency II quantitative reporting templates should replace all present national templates; except for national specific templates referring to specificities of local markets or national legislations, e.g. distribution of profits or statistical data). As a result, instead of 27 reporting frameworks the aim is to have only one. Robust and timely information provided by the undertakings to supervisors is an essential cornerstone of preventive and risk-based supervision and is of utmost importance to policyholder protection.
Why line by line reporting
Look-through reporting on a line by line basis for assets is being introduced for micro prudential supervision and financial stability. But there is a disjunct between the regulatory and supervisory aims and the reality for the reporting entities. Industry responses to EIOPA’s public consultation on the reporting templates stress the difficulties and costs involved in obtaining the necessary information especially in relation to funds of funds, alternatives and funds managed by third parties.
In fact in some cases firms argue that not only will the costs outweigh economic benefits but on certain funds it is simply impossible to obtain that information altogether. The symposium aims to tease out some of these differences and enhance the dialogue between all three parties.
How the symposium works
The symposium is a debate that takes the form of a series of articles from the participants. In the first round each author will set out their key thoughts and concerns as well as pose questions to each other. These questions will be addressed in a second round of articles which will be published at a later date.
About the participants
Three experts have been chosen to represent their stakeholder groups. Carlos Montalvo, Executive Director, EIOPA, presents the views of the regulator. Oliver Bäte, Chief Financial Office, Allianz SE, presents the views of the insurer, and Dr Nathalie Aubry-Stacey, Director – Market Practice and Regulatory Policy Department, ICMA, presents the views of the asset manager*.
The debate is moderated by Gideon Benari, Editor, Solvency II Wire. More information on the participants is available on their respective biography pages.
*Members of ICMA’s pan-European Solvency II Working Group include: Alliance Bernstein, Allianz Global Investors, AXA IM, Blackrock, BNP Paribas IP, Credit Suisse AM, Deutsche Bank AM, FandC, Goldman Sachs AM, ING, JP Morgan AM, PIMCO, Schroders, SSGA.
Link to Symposium index page.