Solvency II News: no agreement on main issues in trilogue

 October 25, 2013

[Last updated 25/10/2013 12:25]

Initial reports indicate that no agreement was reached on the main issues in the Omnibus II trilogue yesterday (24/10/2013). Three people familiar with the discussions told Solvency II Wire that parties were not able to come to an agreement. The next trilogue is scheduled for 13 November.

According to one source, there was no agreement on Long-Term Guarantees (LTG), equivalence or sovereign debt, but parties were moving closer on some of these.

The meeting lasted about an hour and a half and it was already known a few days ago that the trilogue would be shorter than initially planned. An EP source said that the Council had put forward a proposal on the LTG package but that disagreement remained on a number of key issues. However, up until Wednesday night some sources were optimistic a deal could be reached.

Details are yet to emerge as to the nature of the discussions. Despite high optimism from both the Parliament and Council in the run up to the trilogue it is now unclear what the implications for the process will be.

[25.10.2013 12:25]

Council position on LTG package

On 11 October the Lithuanian Presidency circulated a working document (Presidency package ahead of the political Trilogue on 24 October 2013) outlining an agreed position on the LTG package. The document, seen by Solvency II Wire, proposes the following amendments to previous texts. It is not clear if this is the version presented to the trilogue parties.
  1. The floor for the fundamental spread for corporate bonds is set at 35%.
  2. The floor for the fundamental spread for government bonds is set at 30%.
  3. The application ratio for the volatility adjustment is set at 65%.
  4. An improved method for the calculation of the national top-up for the volatility adjustment.
  5. A clarification that volatility adjustment does not entail the Solvency Capital Requirement charge.
  6. An extension of the transitional measures to 16 years.
The document also states, “The Presidency believes that changes made to the Long Term Guarantees package enable to reach (sic) right balance between all measures that are needed to address the specificities of different insurance products offered in the Member States.” “The Long Term Guarantee measures, as they are designed now, should effectively adjust the Solvency II framework to cope with artificial volatility and low interest rate environment, and allow for the smooth transition from the Solvency I to the Solvency II [framework].” Solvency II Wire is seeking further confirmation and will update this article. — To subscribe to the Solvency II Wire mailing list for free click here.]]>