What's differences between RBC and Solvency II?

[sanki]

Anyone has comment or work on it?

Now US has RBC regulation, seems US don't need solvency II, only want to improve RBC by different phases on different risks

Will the improvement of RBC converge to solvency II?
(I heard that US will jump into IFRS 4 phase II with IASB, may be this is the trigger of convergence?)

[JMO]

An excellent article on page 32 discusses the various approaches to RBC.

http://www.soa.org/library/newsletters/risk-management-newsletter/2006/december/RMN0612.pdf

[sanki]

Thank you for this article
I also see the same article in this month's contingencies
http://www.contingencies.org/marapr08/water.pdf

"Cash Balance" seems really a buzzwords, cash balance pension plan, cash balance life annuity, cash balance method for economic capital...

[JMO]

Thank you for this article
I also see the same article in this month's contingencies
http://www.contingencies.org/marapr08/water.pdf

"Cash Balance" seems really a buzzwords, cash balance pension plan, cash balance life annuity, cash balance method for economic capital...

Personally I would have said "Cash flow" or "cash flow projection" rather than "cash balance." It amounts to the same thing when talking about determining capital requirements.

[sanki]

Following are some recent news...

http://www.accountancyage.com/accountancyage/news/2212128/ifrs-switch-challenges-insurers

IFRS switch challenges for US insurers

CFOs and senior life insurance executives agreed that the industry is struggling to understand and prepare for the impact the financial reporting changes will have on business

Written by Penny Sukhraj

Accountancy Age, 17 Mar 2008

Participants of a roundtable hosted by Ernst & Young in the US has found that life insurance companies are struggling to cope with the changes resulting from the convergence of US GAAP and IFRS.

CFOs and senior life insurance executives agreed that there was an over-riding consensus that the industry is struggling to understand and prepare for the impact the financial reporting changes will have on business.

The regulations are still in flux but companies who seek to understand the impacts of the changes on their businesses will be better equipped to deal with them.

'Impacting pricing and risk management, the transition to principles-based reserving and capital, coupled with pending regulatory convergence, will require significant changes in processes and systems,' said E&Y's senior actuarial advisor, Tara Hansen.

===================
http://www.pr-inside.com/ernst-amp-young-roundtable-reveals-heightened-r486009.htm

Implementation Challenges...Consistency as the Brass Ring

As regulations converge, participants suggested that implementation will need to revolve around creating consistency through an integrated set of reporting processes. While lack of resources to make the necessary changes was the greatest implementation concern mentioned by participants, the group also acknowledged that even with the right people and funding, significant issues remain, such as:

-- Modeling and Technology Platform Challenges and Opportunities - Topics for insurers to address include projection capabilities and runtime as well as the credibility and availability of data.

-- Shift to Stochastic Processing - There will likely be a need for a platform that is projection-based and stochastic in nature.

-- Systems for Analyzing Reserve Changes - Moving forward, companies need systems in place to explain results and analyze reserve movements from period to period in a stochastic environment, with the ability to change assumptions as best estimates migrate over time.

-- Greater Communication Between Pricing, Valuation, and Corporate - This will be crucial to eliminate unwanted surprises.

-- Auditability - This includes creating an appropriate control environment and review process as well as the appropriate documentation. Since periodic reassessment of assumptions is required to obtain principles-based results, this is particularly complicated.

[JMO]

The SOA has research reports on Economic Capital. These include a comparison of various methods of setting capital targets.

http://www.soa.org/files/pdf/research-ec-report.pdf

And a shorter version, based on a Power Point presentation:
http://www.soa.org/files/pdf/research-ec-presentations.pdf

[sanki]

Awesome report!

thanx...

[sanki]

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080515005113&newsLang=en