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Its aim is to test various options contained in the Solvency II LTG measures in order to assess the effects that the implementation of such measures may have on: policyholders and beneficiaries, insurance and reinsurance undertakings, supervisory authorities and the financial system as a whole.
The assessment will focus on the evaluation of the following key features (individually and in combination): adapted relevant risk-free interest rate term structure (“Counter-cyclical Premium”); extrapolation; matching adjustment (“Classic” and “Extended”); transitional measures; and extension of the “Recovery Period”.
Insurance undertakings will have until 31 March 2013 to carry out their estimation of the impact of the measures covered in the LTGA. In the course of April and May the data submitted by insurance undertakings will, first, be validated by the national competent authorities (NCAs) and, then, be analysed by EIOPA at the EU level. The report presenting the technical results of the LTGA exercise together with EIOPA’s conclusions is planned to be published in the second half of June 2013.
The assessment covers life as well as non-life insurance companies in the different national markets. The sample captures a range of undertakings of diverse size and nature.
Gabriel Bernardino, Chairman of EIOPA, said: “EIOPA’s independent supervisory assessment will provide a reliable basis for an informed political decision on the long-term guarantee measures to be included in Solvency II. It is essential for policyholder protection and financial stability that Solvency II appropriately reflects the long-term financial position and risk exposure of insurance and reinsurance undertakings carrying out insurance business of a long-term nature.”