Solvency II—group risk in relation to insurance groups
Produced in partnership with a member of a leading accounting firm
Solvency II—group risk in relation to insurance groups

The following Financial Services guidance note Produced in partnership with a member of a leading accounting firm provides comprehensive and up to date legal information covering:

  • Solvency II—group risk in relation to insurance groups
  • Regulatory background to Solvency II
  • Definition of a group and group supervision under Solvency II
  • Group solvency calculation for EEA-based insurance groups

This Practice Note aims to provide a brief overview ofthe key aspects ofSolvency II related to group risk in relation to insurance groups. For more information about group supervision requirements, see Practice Note: Prudential requirements for UK insurers—Pillar 2 and Pillar 3 requirements.

Regulatory background to Solvency II

The Solvency II framework (Solvency II) was established via the Directive 2009/138/EC (as amended by Directives 2011/89/EU, 2012/23/EU, 2013/23/EU, 2013/58/EU and 2014/51/EU) (SII Directive) which was adopted by the Council ofthe European Union and the European Parliament in November 2009 and via Commission Delegated Regulation 2015/35 (SII Regulation). The Solvency II framework refers to measures which form part ofa comprehensive review ofthe capital adequacy regime for insurance firms in the European Union (EU). The SII Directive (as a result ofan amendment made by Directive 2014/51/EU (Omnibus II)) came into effect on 1 January 2016.Directive 2009/138/ECDirective 2014/51/EU

The SII Directive requires groups to be supervised on a holistic basis to gain a coherent understanding ofthe risks that exist at group level. In this context, it particularly focuses on problems that can arise from:

  1. multiple use ofcapital—supervisors are to make sure that capital is not used twice or more within an insurance group

  2. specific group related risks—risks caused by the accumulation or concentration ofrisks as well as due to intra-group transactions, and

  3. group structure relevant risks—these are risks that arise from the group structure and which are not related to specific insurance business

Within Solvency II the treatment ofgroup risk in relation to insurance groups is mainly covered in articles