Solvency II ratios don’t reflect economic capitalization
Saturday, 12 12 2015, Category: Insurance and Reinsurance, Country: Europe
Solvency II ratios will not always reflect economic capitalisation of insurers, according to a new report by Moody's.
In fact, the firm said that Solvency II ratios may underestimate or overestimate insurers' actual economic capitalisation because of the challenges in calibrating all risks on a pure economic basis at a 99.5 percent confidence level and the impact of the transitional measures agreed to smooth Solvency II implementation.
As a result, the emphasis that Moody's will place on Solvency II ratios in its assessment of insurers' capitalisation will vary, notably by category of insurer, said the firm in the report, Solvency II Ratios Will Not Always Reflect Economic Capitalisation".
Source: Intelligent Insurer