The Solvency and Financial Condition Report (SFCR) is the cornerstone of the Solvency II public disclosure of European and UK insurers.
Examples of SFCR texts
The seminal article How do you SFCR? published in January 2017 sets out the details of each section and some early examples of the reports.
SFCR structure
The Solvency and Financial Condition Report is made up of five major sections and a summary section.
Summary
A. Business and Performance
A.1 Business
A.2 Underwriting Performance
A.3 Investment Performance
A.4 Performance of other activities
A.5 Any other information
B. System of Governance
B.1 General information on the system of governance
B.2 Fit and proper requirements
B.3 Risk management system including the own risk and solvency assessment B.4 Internal control system
B.5 Internal audit function
B.6 Actuarial function
B.7 Outsourcing
B.8 Any other information
C. Risk Profile
C.1 Underwriting risk
C.2 Market risk
C.3 Credit risk
C.4 Liquidity risk
C.5 Operational risk
C.6 Other material risks C.7 Any other information
D. Valuation for Solvency Purposes
D.1 Assets
D.2 Technical provisions
D.3 Other liabilities
D.4 Alternative methods for valuation D.5 Any other information
E. Capital Management
E.1 Own funds
E.2 Solvency Capital Requirement and Minimum Capital Requirement
E.3 Use of the duration-based equity risk sub-module in the calculation of the Solvency Capital Requirement
E.4 Differences between the standard formula and any internal model used
E.5 Non-compliance with the Minimum Capital Requirement and non-compliance with the Solvency Capital Requirement
E.6 Any other information
Future amendments to the structure of the SFCR
In October 2025 the European Union published an amendment to the Solvency II directive: Commission Delegated Regulation (EU) 2026/269 of 29 October 2025 amending Delegated Regulation (EU) 2015/35, which includes changes to the structure of the SFCR.
The changes will enter into force on 30 January 2027.
The new structure will be targeted at two distinct user groups of the SFCRs: policy holders and market professionals (emphasis added):
“Directive 2009/138/EC requires the regular disclosure of essential information through the solvency and financial condition report. That report is targeted at policy holders and beneficiaries on the one hand, and analysts and other market professionals on the other hand. To address the needs and the expectations of those two different groups, Directive (EU) 2025/2 amending Directive 2009/138/EC requires that the content of the report should be divided into two parts, clearly identified but disclosed jointly.
The first part, addressed mainly to policy holders and beneficiaries, should contain the key information on business, performance, capital management and risk profile.
The second part, addressed to market professionals, should contain detailed information on the business and on the system of governance, specific information on technical provisions and other liabilities, the solvency position as well as other data relevant for specialised analysts.”
Comparison of the existing and new SFCR structures
The new structure of the SFCR does not map directly to the existing SFCR, expanding on some sections, while reducing others. The introduction of a section on sustainablity will no doubt be welcome.
| Current SFCR | SFCR 2027 |
| Summary | Policy holders section |
| A. Languages in which this part is available | |
| B. Business and Performance | |
| C. Capital Management and Risk Profile | |
| D. Other information | |
| Market Professionals section | |
| A. Business and Performance | A. Business and Performance |
| A.1 Business | A.1 Business |
| A.2 Underwriting Performance | A.2 Underwriting Performance |
| A.3 Investment Performance | A.3 Investment Performance |
| A.4 Performance of other activities | A.4 Performance of other activities |
| A.5 Any other information | A.5 Any other information |
| B. System of Governance | B. System of Governance |
| B.1 General information on the system of governance | B.1 General information on the system of governance |
| B.2 Fit and proper requirements | B.2 Outsourcing |
| B.3 Risk management system including the own risk and solvency assessment | B.3 Any other information |
| B.4 Internal control system | C. Valuation for Solvency Purposes |
| B.5 Internal audit function | C.1 Assets |
| B.6 Actuarial function | C.2 Technical provisions |
| B.7 Outsourcing | C.3 Other liabilities |
| B.8 Any other information | C.4 Alternative methods for valuation |
| C. Risk Profile | C.5 Any other information |
| C.1 Underwriting risk | D. Capital Management and Risk Profile |
| C.2 Market risk | D.1 Own funds |
| C.3 Credit risk | D.2 Solvency Capital Requirement and Minimum Capital Requirement |
| C.4 Liquidity risk | D.3 Use of the duration-based equity risk sub-module and of the provision on long-term equity investments in the calculation of the Solvency Capital Requirement |
| C.5 Operational risk | D.4 Differences between the standard formula and any internal model used |
| C.6 Other material risks | D.5 Material liquidity risks and material risk concentrations |
| C.7 Any other information | D.6 Risk-mitigation techniques |
| D. Valuation for Solvency Purposes | D.7 Material risks not captured by the Solvency Capital Requirement |
| D.1 Assets | D.8 Overall solvency needs |
| D.2 Technical provisions | D.9 Non-compliance with the Minimum Capital Requirement and non-compliance with the Solvency Capital Requirement |
| D.3 Other liabilities | D.10 Any other information |
| D.4 Alternative methods for valuation D.5 Any other information | E. Sustainability-related information |
| E. Capital Management | |
| E.1 Own funds | |
| E.2 Solvency Capital Requirement and Minimum Capital Requirement | |
| E.3 Use of the duration-based equity risk sub-module in the calculation of the Solvency Capital Requirement | |
| E.4 Differences between the standard formula and any internal model used | |
| E.5 Non-compliance with the Minimum Capital Requirement and non-compliance with the Solvency Capital Requirement | |
| E.6 Any other information |
