SOLVENCY II
(i) Central Bank publishes Solvency II National Specific Template DPM and Taxonomy – Version 1.1.0
On 5 October 2016, the Central Bank of Ireland (the "Central Bank") published the National Specific Template (the "NST") Data Point Model ("DPM") and Taxonomy - Version 1.1.0 (the "Release") followed by the publication of Hotfix on 10 November 2016.
The Release relates to the set of NSTs previously published on the Central Bank website and the NST Release notes introduce the DPM and XBRL taxonomy deliverables covering information requirements defined by the Central Bank in the NSTs.
The following documentation relating to the Release was published on the Central Bank's website:
NST Release Notes & NST Release Notes Hotfix;
- NST DPM Documentation;
- NST DPM Dictionary (Updated 10 November 2016);
- NST DPM Annotated Templates;
- NST XBRL Taxonomy Documentation;
- NST XBRL Taxonomy Package (Updated 19 December 2016);
- NST XBRL Test Instance Documents (Updated 9 December 2016);
- List of Known Issues (Updated 9 December 2016); and
- NST Validations (Updated 9 December 2016).
The Release can be accessed via the following link:
(ii) Solvency II Commission Implementing Regulation (EU) 2016/1800 published in the Official Journal of the EU
On 12 October 2016, Commission Implementing Regulation (EU) 2016/1800 of 11 October 2016 laying down implementing technical standards with regard to the allocation of credit assessments of external credit assessment institutions to an objective scale of credit quality steps in accordance with the Solvency II Directive (the "Commission Implementing Regulation") was published in the Official Journal of the EU
Article 111(1)(n) of the Solvency II Directive (2009/138/EC) provides that the allocation of credit assessments of external credit assessment institutions ("ECAIs") to an objective scale of credit quality steps for the purposes of the calculation of the solvency capital requirement (the "SCR") (the "Allocation") must be consistent with the use of external credit assessments of ECAIs in the calculation of the capital requirements for credit institutions and financial institutions, as set out in Regulation (EU) No 575/2013.
Article 3 of the Solvency II Delegated Regulation (EU) 2015/35 provides that the Allocation is subject to a system of seven credit quality steps in contrast to the six credit quality steps laid down in Regulation (EU) No 575/2013 and used in the mapping methodology for credit institutions and financial institutions.
In order to achieve the consistency required by Article 111(1)(n) of the Solvency II Directive, the Allocation is based on the mapping methodology for credit institutions and financial institutions subject to alterations, where appropriate, taking into account the extra step laid down in the credit quality system of relevance for the calculation of the SCR.
The allocation arrangements apply to credit assessments of ECAIs, which are credit rating agencies that are registered or certified in accordance with Regulation (EC) 1060/2009 or central banks issuing credit ratings which are exempt from the application of Regulation (EC) 1060/2009. The allocation arrangements also apply to credit assessments endorsed by an ECAI in accordance with Regulation (EC) 1060/2009.
The Commission Implementing Regulation entered into force on 1 November 2016 and can be accessed via the following link:
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R1800&from=EN
(iii) Solvency II Commission Implementing Regulation (EU) 2016/1868 published in the Official Journal of the EU
On 21 October 2016, Commission Implementing Regulation (EU) 2016/1868 of 20 October 2016 amending and correcting Implementing Regulation (EU) 2015/2450 laying down implementing technical standards ("ITS") with regard to the templates for the submission of information to the supervisory authorities according to Solvency II ("the "Commission Implementing Regulation") was published in the Official Journal of the EU.
In April 2016, Commission Delegated Regulation (EU) 2016/467 introduced the new asset class of qualifying infrastructure investments, extended to European Long-Term Investment Funds ("ELTIFs") the specific treatment in the Solvency II Delegated Regulation (EU) 2015/35 for European Venture Capital Funds and European Social Entrepreneurship Funds and amended Article 168 of the Solvency II Delegated Regulation to provide for equivalent treatment to equities traded on multilateral trading facilities ("MTFs") as those listed on regulated markets.
In order to ensure that supervisory authorities receive appropriate information on qualifying infrastructure investments made by (re)insurance undertakings as well as investments in ELTIFs and equities traded on MTFs, the Commission Implementing Regulation amends the templates for reporting by these undertakings to supervisory authorities accordingly.
The Commission Implementing Regulation entered into force on 10 November 2016 and
can be found at the following link:
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R1868&from=EN
(iv) Central Bank publishes Frequently Asked Questions document on the Guideline for Solvency II (Re) Insurance Undertakings on Directors' Certifications
On 25 October 2016, the Central Bank published a Frequently Asked Questions document (the "FAQs") on the Guideline for Solvency II (Re)Insurance Undertakings on Directors' Certifications (the "Guideline"). The FAQs are meant to be read in conjunction with the Guideline and reflect questions which have been raised and are anticipated in relation to the Guideline. The Central Bank noted that the FAQs may be updated from time to time and was recently updated in November 2016.
The FAQs deal with, amongst other things, the number of Directors Certifications undertakings must prepare and submit to the Central Bank, submission dates for the different Directors' Certifications, and how undertakings should submit their Directors' Certifications.
The FAQs can be found at the following link:
(v) Guidance for (Re) Insurance Undertakings on the Head of Actuarial Function Role
On 28 October 2016, the Central Bank published the Guidance for (Re)Insurance Undertakings on the Head of Actuarial Function Role (the "Guidance"). The aim of the Guidance is to assist undertakings by providing an overview of the issues the Central Bank expects to be considered regarding the tasks of the actuarial function set out in Regulation 50 of the Solvency II Regulations (S.I. 485 of 2015), the Solvency II Delegated Act (2015/35/EU) and the Domestic Actuarial Regime and General Governance Requirements (the "Central Bank Requirements").
The Guidance sets out General Expectations for the role of the Head of Actuarial Function (the "HoAF") which include the following:
- The skills and experience of the HoAF can provide a different perspective than that of other experts within the undertaking and this perspective can be communicated in order to ensure the Board remains fully informed;
- The HoAF is expected to make appropriate enquiries in order to provide informed opinions to the Board; and
- The HoAF is expected to identify any significant deficiencies or areas for improvement in the information made available to him or her by the undertaking for the purposes of assisting him or her in the task of expressing opinions on the underwriting policy and the reinsurance arrangements and the contribution to the effective implementation of the risk management system.
The Guidance covers certain tasks of the Head of Actuarial Function Role which include:
- Expressing opinions on the underwriting policy and reinsurance arrangements,
- The contribution to the effective implementation of the risk management system,
- Calculation of capital requirements; and
- Opinions on ORSA process.
The Guidance is to be used by (re)insurance undertakings when complying with their obligations under Regulation 50 of the Solvency II Regulations and will be updated on a regular basis by the Central Bank as issues arise concerning the above tasks. The Guidance does not purport to address all aspects of these tasks.
The Guidance explains that certain aspects of the Guidance may not be relevant or material to every (re)insurance undertaking, due to the nature, scale and complexity of the undertaking. In addition, a (re)insurance undertaking may decide to adopt different practices to those covered in this Guidance to ensure compliance with the Solvency II Regulations and Central Bank requirements. In this case, the (re)insurance undertaking is expected to be in a position to explain to the Central Bank, upon request, the reason for any divergence from the Guidance.
The Guidance can be found on the Central Bank's website at the following link:
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