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Solvency II Directive 2009 (2009/138/EC) is a Directive in European Union law that codifies and harmonises the EU insurance regulation. Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency .
At the heart of the prudential Solvency II directive, the own risk and solvency assessment (ORSA) is defined as a set of processes constituting a tool for decision-making and strategic analysis. It aims to assess, in a continuous and prospective way, the overall solvency needs related to the specific risk profile of the insurance company.
The matching adjustment is a mechanism prescribed in the Solvency II Directive that allows insurance firms 'to adjust the relevant risk-free interest rate term structure for the calculation of a best estimate of a portfolio of eligible insurance obligations'. [1]
In social science, economic capital is distinguished in relation to other types of capital which may not necessarily reflect a monetary or exchange-value.These forms of capital include natural capital, cultural capital and social capital; the latter two represent a type of power or status that an individual can attain in a capitalist society via formal education or through social ties.
First, a warning that this is about to get math-heavy, but if you want to calculate it, there are four main types of solvency ratios that lenders look at. 1. Interest Coverage Ratio
The definition of operational risk, adopted by the European Solvency II Directive for insurers, is a variation adopted from the Basel II regulations for banks: "The risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal ...
Cat models are used to derive catastrophe loss probability distributions which are components of many Solvency II internal capital models. Likewise, cat bond investors, investment banks, and bond rating agencies use cat modeling in the pricing and structuring of a catastrophe bond .
Commission Implementing Regulation (EU) 2016-165 of 5 February 2016 laying down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 1 January until 30 March 2016 in accordance with Directive 2009-138-EC of the European Parliament and of the Council (Solvency II) (Text with EEA relevance)