Solvency II watered down

JPMorgan says the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has begun to water down Solvency II proposals to help insurers, the FT reports.

The current proposals still set raise capital levels by 65-75% and reduce available capital by 30-40%.

“As a result, the majority of the industry will have a solvency ratio well below 100 per cent – in the range of 60-70% – which is something of a concern,” they wrote in a recent note.

Further ammendments

Franz Rotger, analyst at SocGen, said: “The advice has not yet been transposed into law. In fact, we expect the European Commission to significantly amend the recommendations.”

CEIOPS has said it will cut the market risk charge for example, but that the charge would still be higher than that outlined in earlier versions of the rules.

The FT said that CEIOPS was getting closer to a deal that would allow companies to use a lower than triple A-rated government bonds, although the yield would have to be somehow adjusted to account for the risk that a country such as Greece or Portugal could default on its debt.