Gabriel Bernardino Chairman of EIOPA

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1 Solvency II status update Gabriel Bernardino Chairman of EIOPA KPMG Czech Republic Solvency Conference KPMG Czech Republic Solvency Conference Prague, 12 April 2012

2 Where is Solvency II? Directive (O.J. 17 December 2009) update by OMDII Implementing measures: awaiting proposal from EU COM Standards and guidelines: under preparation p by EIOPA, planning to publicly consult later in 2012 waiting for Omnibus II! 17 April

3 Draft standards Level 3 and guidelines by EIOPA Draft COM proposal for implementing measures Level 2 Vote EP July (Sept.) Level 1 Trialogue (April- June) ECON vote 21/03/12

4 What is Omnibus II? What is the Omnibus II Directive about? Basically: about EIOPA and Solvency II Power and scope for drafting regulatory and implementing technical standards for Solvency II and much more Transitional measures Implementation deadline Sided by discussions on technical/political matters on the content of Solvency II: volatility, proportionality, national and specific industry interests 17 April

5 SII The last challenge KEY challenge: How to deal with the impact on long-term guaranteed products? Mitigate the effect of short-term volatility Preserve transparency of economic approach Reward long-term ALM and hedging strategies Build counter-cyclical l measures Reinforce level playing field 17 April 2012

6 Implications of delays in OMDII Lack of legal basis for EIOPA to consult publicly on standards risk additional delays if EIOPA cannot publicly consult Uncertainty regarding the implementation date of SII will OMDII be agreed before the end of 2012? By when will Member States have to implement the Directive? Risk loosing momentum in the preparation of the implementation of Solvency II (time and money!) 17 April

7 Solvency II back to basics Better understanding and management of risks Enhanced group supervision Use of (partial) internal models and undertaking specific parameters Harmonized reporting framework Reliable disclosure Contribute to financial stability Increased protection of consumers Good reasons to implement Solvency II soon! 17 April

8 How to get to 2014? EIOPA supports entry into force in 2014 What is needed to get there? Agreement among all parties to achieve this goal: common roadmap with fixed milestones: end of trialogue, adoption of implementing measures, time for implementation and preparation for supervisors and undertakings Allow for efficient and timely (start in 2012) public consultation by EIOPA on standards and guidelines 17 April

9 EIOPA s work on preparing the implementation of SII Report on QIS 5 Joint report on calibration of risk factors in the standard formula Consultation on Solvency II XBRL Taxonomy Consultation on Guidelines on ORSA Consultation on draft proposal on Quantitative Reporting Templates + add-on for financial stability purposes Launch of pre-application process for internal models Colleges of supervisors action plan 9

10 EIOPA s work on preparing draft standards and guidelines EIOPA is currently working on +/- 50 sets of draft guidelines and standards Aim is to provide support to convergent application of the SII framework, including crucial elements such as the risk free rate. Consolidation of standards and guidelines into two single rule-books to ensure quality of the rules and facilitate consultation Pre-consultation on drafts with selected stakeholders and liaise with EIOPA s insurance and reinsurance stakeholder group (IRSG) 17 April

11 EIOPA s work on preparing draft standards and guidelines Areas of standards and guidelines: Valuation of assets and liabilities including technical provisions Solvency capital requirements Own funds Internal models Group supervision Supervisory transparency and accountability Supervisory reporting and public disclosure Governance ORSA Supervisory review process Capital add-ons Extension of recovery period ( Pillar 2 dampener ) Finite reinsurance Special purpose vehicles Repackaged loan investments 17 April

12 Thank you Gabriel Bernardino, Chairman 12