Finance and Treasury

Risk Based Capital and Insurance Solvency Supervision

Solvency regimes across the region have moved from fixed ratios to risk based capital, which changes what an insurer must be able to demonstrate rather than simply report. This course covers meeting that standard. Delegates work through the purpose of regulatory capital and the policyholder protection it exists to provide. Valuation of assets and technical provisions on a supervisory basis follows, including where it departs from the published accounts. Capital requirement components are covered by risk type: insurance, market, credit and operational, with the drivers of each. Diversification and correlation assumptions are addressed. Own risk and solvency assessment is covered as an internal exercise rather than a return, including stress and scenario testing that a board can act on. Capital management actions and the options available when a ratio deteriorates follow. Supervisory reporting and engagement are addressed. The course closes on group supervision and on the early warning indicators a supervisor watches.