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Transcript of Date (Arial 16pt) bold) Subtitle for event – (Arial 28pt) Giles Fairhead Head of Department,...
Date (Arial 16pt)
bold)Subtitle for event – (Arial 28pt)Giles FairheadHead of Department, Retail Life
Life Insurance Division
Solvency II regulatory reporting
Agenda
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1. Solvency II reporting and submissions timetable
2. The PRA’s expectations in the preparatory phase
3. The PRA’s data collection system, firm testing and on-boarding plan
4. Asset data reporting expectations
5. Current ‘hot topics’ from industry engagement
Three-pillar approach
Pillar 2 Pillar 3
Reporting and disclosure is integral to Solvency II
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Pillar 1
Quantitative requirements
• Own Funds (including balance sheet)
• Minimum capital requirement (MCR)
• Solvency Capital Requirement (SCR)
Pillar 2
Qualitative requirements and
supervisory review • Governance, risk
management and required functions
• Own risk and solvency assessment
Pillar 3
Reporting, disclosure and market discipline• Supervisory Process• Disclosure• Transparency• Support of risk-based
supervision through market mechanisms
• Market-consistent valuation of balance sheet
• Risk Based requirements
• Business governance• Risk-based
supervision
• Disclosure• Transparent markets
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The Solvency II reporting requirements include qualitative and quantitative reports
Quantitative reporting templates Narrative reports
Sections covered
• Balance Sheet• Premium claims and expenses• Own funds• Variation analysis• SCR and MCR• Assets• Technical provisions• Reinsurance• Group reporting
• Business and performance• System of governance• Risk profile• Valuation for solvency purposes• Capital management
• The Solvency II regime will place new reporting requirements on firms covering both quantitative and qualitative aspects
• The Solvency and Financial Condition Report (SFCR) and the Report to Supervisors (RSR) contain both qualitative and quantitative reports
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Audience Public Private
Narrative Reports
Type Qualitative Qualitative
Frequency Annual • Annual summary• In full every 3 years
Quantitative Reporting Templates
Type Quantitative Quantitative
Frequency Annual Annual & Quarterly
National Specific Templates
Frequency N/A Annually
Other Major developments affecting relevance of SFCR will require an updated SFCR
PRA ad-hoc reporting will continue
Pillar 3 will require firms and groups to make certain reports and templates publically available
• The Pillar 3 reporting requirements under Solvency II focus on two main reports, the Solvency and Financial Condition Report (SFCR) and the Regular Supervision Report (RSR)
• A limited number of quantitative templates and qualitative data are required to be made publically available in the SFCR
• All quantitative templates and a detailed set of qualitative data is required to be reported privately to the regulator in the RSR
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1 January 2016SII Implementation
31 March 2015SII Transposition
October 2014ITS 1 Publication
Dec 2014 –Mar 2015
ITS 2 Public Consultation
June 2015ITS 2 Publication
Jun – Sep 2014Guidelines 1 Public Consultation
Dec 2014 – Mar 2015Guidelines 2 Public Consultation
February 2015Guidelines 1 Publication
July 2015Guidelines 2 Publication
December 2014Draft SII taxonomy
2014 2015 2016
SII Directive
Guidelines
Implementing Technical Standards
Taxonomy
Solvency II reporting policy timetable
July 2014Final taxonomy for preparatory phase
April 2015Candidate Final SII taxonomy
July 2015Final SII taxonomy
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The PRA will continue to publish consultation papers on Solvency II to gain industry feedback. Supervisory statements will be published ahead of transposition at 31 March 2015
• The PRA proposed 11 NST templates issued as part of CP16/14.
• Remaining NST templates are expected to be issued for consultation before the end of the year.
• The PRA expects to issue further information, as required, on materiality levels, exemptions and the application of proportionality later this year or early 2015.
Number Template Name
NS.01 With-profits value of bonus
NS.02 With-profits assets and liabilities
NS.03 Pools
NS.04 Assessable mutuals
NS.05 Revenue account (Life)
NS.06 Business model analysis (Life)
NS.07 Business model analysis (Non-Life)
NS.08 Business model analysis – financial guarantee insurers
NS.09 Best-estimate assumptions for life insurance risks
NS.10 Projection of future cash flows (best-estimate – non-life: sub-classes)
NS.11 Non-life insurance claims information (general liability sub-classes)
The PRA is seeking industry feedback on a range of topics
Firms with non-December year end should speak to supervisors for their submission timetable
2015 2016 2017
Solvency II Submissions
Solvency I Submissions
Solos
Groups
Preparatory phase returnsCat 1-3 firms only
SII returns
March 2016Last Solvency I submission
26 May 25 Aug 25 Nov
Q1 Q2 Q3
25 Feb 19 May
Q4 Annual + NST
1 Jul 25 Nov
Annual Qrtly
20 May
One off
Day 1 returns
7 Jul 6 Oct 6 Jan
Q1 Q2 Q3
7 Apr 30 Jun
Q4 Annual
15 Jul 6 Jan 2016
Annual Qrtly
20 May
One off
Current timetable for submission of returns for firms and groups with 31 December year end
All directive firms and groups
NB: Details dependent on final text.
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NB: Please be aware that the date of Day 1 returns was changed to 20 May 2016 for both solos and groups in the Delegated Act. This change was made
on the table above after the PRA Solvency II Conference on 17 October 2014 .
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The PRA’s expectations of firms participating in the preparatory phase
A significant increase in the
extent and depth of insurance data shared between
firms and the PRA
Expectations of firms were set in December 2013 when the PRA published Supervisory Statement 4/13 on applying EIOPA’s preparatory guidelines
The preparatory phase should be used by firms to prepare for Solvency II implementation and returns should be of a high standard and quality
Firms and groups will need to be on-boarded onto the BoE PRA Data Collection system in Q1/2 2015. Training will also be made available
All quantitative firm returns are expected to be in XBRL format with qualitative returns in PDF
Category 1-3 firms and groups required to report. All firms and groups in scope of preparatory reporting should have been notified in January 2014
NSTs not expected for interim reporting
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Collections system
XBRL processor
Secure Web Portal
PlausibilityValidation
EIOPAPRA
Supervision
QRTs
NSTs
Qualitative returns
• The PRA will use a new system to support data collection and XBRL processing, which firms will be able to access via a web portal
• All returns must be provided in the following formats:• QRTs – in XBRL • Qualitative returns – in PDF • NSTs – in Excel (initially, may move to XBRL in the future)
Firm submits
Firms will submit returns via a new reporting system
• Feedback provided to firms on validation and plausibility
• Re-submissions may be required or further explanation requested
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• The PRA intends to implement and start testing the data collection system and the XBRL processor in Q4 2014
• Data collection system testing with firms is planned in two stages;
1. Industry testing for Cat 1-3 firms – Cat 1-3 firms will be expected to test the PRA external web portal prior to June 2015 including logging in, setting up their return and submitting test data
2. Industry testing for non Cat 1-3 firms – from Q3 2015 all other firms will be provided the opportunity to also test the Portal, to trial logging in, setting up returns and uploading files
• Firms will be expected to on-board, with those participating in the preparatory phase prioritised
Q4
2014
PRA XBRL testing
Industry testing (Cat 1-3)
On-boarding (Cat 1-3)
Industry testing (all other firms)
Q1 Q2 Q3 Q4
2015
Q1
2016
The PRA will be conducting industry testing and on-boarding firms throughout 2015
On-boarding (all other firms)
Solvency II returns will require the submission of detailed asset data for the first time. As a result, the volume of data submitted is expected to significantly increase.
This will include line by line asset data which must include a range of detailed information about the asset including items such as NACE codes and geography.
Given this increase in granularity the PRA expects firms to need to have:
• Early engagement with the organisations who manage their assets to prepare for the requirements that will be placed upon them as a result of the asset data submissions
• Early engagement with other stakeholders (e.g. IT providers, information providers)
The PRA would expect cat 1-3 firms to be well advanced in this regard as some of this granular information will be required in the preparatory reporting.
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Solvency II reporting increases the amount of detailed information reported
• The PRA Solvency II regulatory reporting industry working group acts as a forum for the PRA and industry representatives to discuss technical and practical implementation challenges.
• Three key areas where firms are seeking further clarity have been highlighted.
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Current ‘hot topics’ from the industry engagement
Asset Look through Materiality
threshold
Audit and assurance of regulatory returns
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If firms have questions regarding Solvency II regulatory reporting requirements and interpretation, they should :
1. Check the published PRA Q&As on the BoE PRA website http://www.bankofengland.co.uk/pra/Pages/solvency2/preparing.aspx
2. Submit questions to EIOPA’s question and answer process if the questions have not already been answered
https://eiopa.europa.eu/publications/eiopa-guidelines/qa-on-guidelines/index.html
3. Help the PRA track questions submitted to EIOPA by notifying [email protected]
Addressing firm questions
The PRA will continue to publish answers to questions received from firms in the run up to implementation
• The PRA is building a new data collection system and will be ready to receive the submission of information in the preparatory phase from June 2015
• The PRA is consulting on NSTs in CP16/14, final templates will be published in a policy statement ahead of transposition. Further consultation papers will be published on reporting including Lloyd’s NST and firm exemptions from Solvency II reporting
• Reporting policy is increasingly stable, there are some outstanding issues that the PRA is aware of through its work with the regulatory reporting industry working group
• Testing of the new system is expected to start in Q1 2015 and will be phased in the run up to implementation. Firms will be expected to on-board to the system from Q2 2015. Cat 1-3 firms participating in the preparatory phase will be prioritised for both testing and on-boarding
Key messages – regulatory reporting
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Firms with a 31 December year end should be aware of when they will be involved in PRA testing, on-boarding and when they need to submit their first returns
Next steps for firms
Cat 1-3 firms All other firms
Testing • February 2015 for selected subset of firms. (participating firms have already been notified)
• Q2 2015 for all other Cat 1-3 firms
• Starting Q3 2015
On-boarding
• Starting Q1 2015 • Starting Q4 2015
First preparatory phase returns
• Solos - 1 July 2015 , Annual submission
• Groups - 15 July 2015, Annual submission
• No reports due during preparatory phase
First Solvency II returns due
• Solos – 20 May 2016, Day 1 submission
• Groups – 20 May 2016, Day 1 submission
• Solos – 20 May 2016 , Day 1 submission
• Groups – 20 May 2016, Day 1 submission
NB: Please be aware that the date of Day 1 returns was changed to 20 May 2016 for both solos and groups in the Delegated Act. This change was made
on the table above after the PRA Solvency II Conference on 17 October 2014 .