The warning follows last week's agreement on the final wording of Omnibus II, a package of amendments for Solvency II, at a trilogue negotiation between the European Parliament, European Commission and Council of the European Union.
Senior insurance executives speaking at a conference in Paris last Friday said they were still waiting on policy-makers to produce vital details on how the Directive would work in practice, particularly in relation to long-term guarantees (LTG) and third-country equivalence.
Policy-makers have yet to state how many basis points should be deducted from the three-month swap rates to cancel out the implied credit risk in the curve and ensure the final Solvency II discount curve is risk-free.
Previous drafts set the deduction at 35bp, but it has not been publicly disclosed whether this was revised on Wednesday. On equivalence, insurers are concerned about how the designation of third countries will work in practice.
Level 2 describes the implementing measures and delegated acts Member States should take to transpose Solvency II into their own jurisdictions and is likely to become the new focus for the industry now that level 1 has been finalised. Some fear implementing measures may be used by Member States to gold plate Solvency II regulation in their own countries and disrupt the level playing field the Directive is meant to create.
Henri de Castries, chief executive of Axa Group, said firms should be vigilant against local supervisors adding "bells and whistles" to Solvency II. He predicts there will be "some very robust debates on level 2" in the months to come. In particular, he warns that any measures that reduce the fungibility of capital should be resisted. "We are going to look very carefully at this", he said.
There are also concerns about the requirement for insurers using the countercyclical measures agreed on last Wednesday to report using two sets of figures: one with the effect of the measures factored in, and one without. This would affect firms taking advantage of the volatility adjuster and matching adjustment.
European legal experts are currently polishing the terms of last week's agreement on Omnibus II. The final version of the Omnibus II text will be put to the Permanent Representatives Committee (Coreper) possibly as early as this week to be adopted by the Council, before the text is made public.
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