Vincles Grup Crèdit Andorrà

Solvency II

Solvència II is a project that began when the European Union gave the go ahead for insurance companies to operate within their scope of liability with a sufficient level of viability (solvency). It is expected to come into force in 2014.

The aim is to improve monitoring and measuring of the risks (market, operational, credit and liquidity) to which insurance companies are exposed. Thus, protection for the insured parties is improved as well as the profitability and transparency for the insurers.

Solvency II is designed upon three pillars:

  • Pillar I - Quantitative: measuring assets, liabilities and capital.
  • Pillar II - Qualitative: a process of internal supervision and checking.
  • Pillar III - Reporting: transparency requirements.

This appears due to the need to correctly optimize and quantify the amount of capital required (SCR, Solvency Capital Requirement) as demanded by Solvency II.

This is why it will be necessary to identify the risk modules that affect the company in keeping with the regulations.

  • SCR Market risk module.
  • SCR Counterparty risk module.
  • SCR Life underwriting risk module.
  • SCR Health underwriting risk module.
  • SCR Non-Life underwriting risk module.

Solvency II demands a great effort in order to adapt and will have a direct effect on entities' profitability.