EU Solvency II Capital Requirements
In her previous video on Global Insurance Regulation Sukhy briefly touched upon capital requirements for insurers under Solvency 2, namely the Minimum Capital Requirement and Solvency Capital Requirement. In this video Sukhy explains these ratios in detail along with how they are calculated and applied to the insurance industry.
Overview
Solvency 2 was implemented in January 2016 and applies to all European insurance and reinsurance companies. It introduced a harmonised risk-based regime for the first time, which is formed under a three-pillar approach. The capital requirements sit under Pillar 1, which deals with the quantitative requirements for insurance companies. These capital requirements are known as the Minimum Capital Requirement and Solvency Capital Requirement, and most commonly referred to as the MCR and SCR.
Key learning objectives:
Define a Solvency II balance sheet
What is the SCR and how is it measured?
What is the MCR and how is it measured?
Summary
Expert
Sukhy Kaur
Sukhy has spent over 11 years working in investment banking. She started her career at Barclays Capital and then went onto join the hybrid capital desk at Credit Agricole, focusing on structuring and the initial regulatory developments of Basel 3. Continuing in the structuring space, she moved to the Capital Solutions desk at UBS Investment Bank.
