EFAMA KPMG Solvency II Report

54 | SOLVENCY II REPORT
4 Working Group Findings
The transitional arrangements that will be introduced with the implementation of
Solvency II will affect when insurers implement changes to their asset allocation and
investment strategy. These measures will assist insurers in adapting to Solvency
II but there is still considerable uncertainty surrounding the exact details of these
arrangements. The capital position of the insurer on a Solvency II basis will be the key
driver of the timing of when asset allocation changes will occur.
As discussed previously, the introduction of Solvency II will also result in changes to
the relationship between insurers and asset managers. Some insurers will adopt a
new business model for their investment management function, potentially with an
increased use of specialist asset managers or potential in-sourcing of the investment
management function. Changes to investment mandates, service level agreements
and benchmarks will also be required. In the meantime, asset managers will need to
continue to manage assets under their current investment mandates but discussions
should be initiated with insurers to ensure that appropriate agreement is obtained with
any new or amended legal documentation in an effi cient manner.
It will have taken insurers a considerable period of time to achieve Solvency II
compliance and this is evident through the extensive effort that insurers have expended
over the past few years in getting to this stage of their preparation for Solvency II.
A considerable part of the journey has been completed to date but there is still a
significant amount of work to do for both insurers and the asset management industry.
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