Solvency of Insurance Undertakings (Mueller-Report) - Eiopa

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Example: life insurance undertaking; more venturesome than the sector.The figures used are based on data for the fourth quarter of 1995.Annex 11 - enclosure 3Items according to article 6 of the directive on insurance accounts:Value inC. Investments 1) K DMFactor in%Value x factor of which 8% of which 7% of which 6%I. Land and buildings (7.7%) 271,812 100 271,812 21,745 19,027 16,309II. Investments in associated undertakings and participating interests (2.9%) 100,548 100 100,548 8,044 7,038 6,033III. 1. Shares and other variable-yield securities and ... (30.7%) 1,081,919 100 1,081,919 86,554 75,734 64,915III. 2. Debt securities and other fixed-income securities 2) (36.7%) 1,294,253 20 258,851 20,708 18,120 15,531III. 3. Participation in investment pools 3) 0 0 0 0III. 4. Loans guaranteed by mortgages (19.6%) 692,361 50 346,181 27,694 24,233 20,771III. 5. Other loans (1.4%) 48,445 20 9,689 775 678 581III. 6. Deposits with credit institutions (1.1%) 37,000 20 7,400 592 518 444III. 7. Other investments 100 0 0 0 0Total (100%) 3,526,338 2,076,400 166,112 145,348 124,584Note: 1) Excluding the item "IV. Deposits with...", since there is no risk here due the possibility to set off.Item Value in K DM of which 3%Mathematical provision as at 31.12.1995 2,936,909 88,107
- 101 -AN N EX 123(50$1(17+($/7+,1685$1&(In the UK, Class IV business is taken to include contracts of the following kinds:a) Contracts providing income benefits when the policyholder is incapable of workthrough sickness, infirmity or accident, and where the contracts have an expected durationof at least five years (or to retirement if earlier) and cannot be cancelled by the insurer.In practice:- benefits are usually payable until the policyholder has either recovered from therelevant affliction, or has reached retirement age, or dies. Because the purpose ofthe policy is to replace lost income, benefits are usually not payable after normalretirement age.- premiums may be set in advance at a level which is constant throughout the termof the contract. However, many contracts are now written (particularly where theterm of the contract is fairly long) with provision for review of the premium at fiveor ten year intervals.b) Contracts providing lump sum benefits on diagnosis of a serious or critical illness(defined in the policy conditions), which are either whole-life contracts or have an expectedduration of at least five years, and which cannot be cancelled by the insurer.- In practice premiums may be set in advance at a level which is constantthroughout the term of the contract. However, many contracts are now written(particularly where the term of the contract is fairly long) with provision for reviewof the premium at five or ten year intervals.- In some insurance contracts a lump sum benefit is payable on diagnosis in place ofa benefit which would otherwise be payable on death – in other words, there is anacceleration of death benefit on diagnosis of a critical illness. Such contracts areregarded as falling within Class I rather than Class IV.c) Contracts providing income benefits on infirmity in old age to offset the costs ofassistance with specified living activities, and which are written as whole-life contracts.- In practice premiums may be set in advance at a level which is constantthroughout the term of the contract. However, many contracts are now written(particularly where the term of the contract is fairly long) with provision for reviewof the premium at five or ten year intervals.
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,QWURGXFWLRQSolvency as referred to
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At the same time, the economic coll
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2.1.2 Technical risksa) Current ris
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Matching riskThe assets of insuranc
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In life insurance premiums must be
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Matching riskThe matching risk can
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However, sufficient experience with
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With respect to the remaining class
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However, these undertakings would n
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first Directive, or in accordance w
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The parameters A, B and C are to be
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The majority of delegations admit t
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Another delegation suggested to all
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extent taking account of inflation
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Investment riskTwo alternative yard
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e put into practice. A number of de
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4.2.2.5 TontinesAt the moment, this
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Moreover, the working group discuss
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5.2.4 Own funds substitutesOwn fund
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A number of members of the working
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to be at risk. In some member state
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AN N EX 1),1$1&,$/',)),&8/7,(62&&85
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- 47 -- inappropriate capital struc
Page 57 and 58: - 49 -In terms of frequency of occu
Page 59: - 51 -Reinsurance riskIn some count
Page 62 and 63: - 54 -a) Asset risk, C 1:The asset
Page 64 and 65: - 56 -factors will result in the re
Page 66 and 67: - 58 -IL i := an average loss rate
Page 68 and 69: - 60 -First level of intervention (
Page 71 and 72: - 63 -AN N EX 32:1)81'65(48,5(0(176
Page 73: - 65 -in the case of balance-sheet
Page 76 and 77: The value of the liabilities, and p
Page 78 and 79: - 70 -Enclosure to Annex 4Examples
Page 81 and 82: - 73 -AN N EX 5$/7(51$7,9(3529,6,21
Page 83: - 75 -Model calculation CAssumption
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Page 89 and 90: - 81 -ANNEX 7(;$03/(6)257+(&$/&8/$7
Page 91 and 92: Example: non-life insurance underta
Page 93 and 94: - 85 -AN N EX 8$1$/7(51$7,9(0(7+2',
Page 95 and 96: AN N EX 9(;7(16,212)7+($'',7,9(0(7+
Page 97 and 98: - 89 -However, the parameters shoul
Page 99 and 100: In principle, an insurance undertak
Page 101: Annex 9 - Enclosure 2Table 2:The ra
Page 105 and 106: - 97 -ANNEX 11(;$03/(6)257+(&$/&8/$
Page 107: Example: life insurance undertaking
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Solvency of Insurance Undertakings (Mueller-Report) - Eiopa

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