2015-12-09-奥纬咨询-Business_Optimization_Heading_into_Solvency_II_6页_172kb

Solvency II Background and Key Insights

Solvency II, set to become mandatory for European insurers from January 1, 2016, aims to strengthen protection for policyholders by aligning regulatory capital requirements with specific risks, such as asset risk or conservatism in balance sheets. This follows a long process starting in 2003 and seeks to create a level playing field across the insurance sector.

Insurers face significant challenges, including varying approaches to regulation (e.g., internal vs. standard formulas), communication gaps with investors and analysts, and the need for business model changes. Opportunities arise from optimizing operations, such as enhancing capital efficiency, stability, and favoring lower-volatility strategies under Solvency II.

Both internal model and standard formula companies can benefit from business and balance sheet optimizations. For instance, quick wins like product redesign or hedging strategies can improve solvency ratios and stability. Oliver Wyman's structured approach has enabled average solvency ratio increases of about 15 percentage points in nine months.

Exhibit outlines three stages: identify key levers, implement for quick wins, and address complex areas. Common levers include using internal models, optimizing investment portfolios, or altering business structures.

As Solvency II looms, insurers must focus on adapting their models and capital strategies to meet regulatory demands and maintain solvency positions, with Oliver Wyman providing expertise in this area.

Three-Stage Optimization Approach

1. Lever identification: Prioritize areas for change using a standardized framework.
2. Implementation: Roll out waves of levers for immediate and medium-term benefits.
3. Follow-up: Address remaining optimizations, leveraging collaborative functions like Risk, Finance, and Actuarial.

Conclusion

Solvency II presents a critical test for insurers, driving changes in capital structures and business models to enhance protection and stability. Proactive optimization programs can yield substantial gains, supported by expert services like those from Oliver Wyman.

Summary Highlights

• Regulatory changes: Forced risk-based capital alignment.
• Key challenges: Formula interpretation, volatility, and transparency.
• Opportunities: Capital boosts through industry-specific actions.
• Benefits reported: Avg. 15 pp. solvency ratio increase.
• Ke рекомендации: Structured optimization plans.

This overview captures the essence without unnecessary details, ensuring clarity and relevance to insurance optimization under Solvency II.