23 September 2005

CEIOPS recommendations on IAS/IFRS Introduction for Prudential Supervision of Insurance Undertakings

The Committee of European Insurance and Occupational Pension Supervisors (CEIOPS) published the final recommendations regarding the Implications of the IAS/IFRS Introduction for the Prudential Supervision of Insurance Undertakings. The Committee states that on the basis of the analysis carried out and taking into account all the differences among the national systems, CEIOPS acknowledged that a wider degree of convergence among supervisory systems can be reached only at a later stage.

In the meantime, there is a strong call for closely monitoring the accounting changes to avoid undesired effects on the Available Solvency Margin and/or the Required Solvency Margin.

In the analysis, only one point has arisen where changes to Directives seem necessary. This relates to the equalisation provisions, which are generally regarded as provisions in the EU and are normally covered by assets as are other technical provisions.

Possibly the following adjustments would be needed:

Clarify in the Prudential Directives that “equalisation reserve” is a technical provision.

Remove the caption “equalisation provision” in the IAD and create a new subcaption “equalisation reserve”

CEIOPS recommendations
Analysis of comments received

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