European insurers are not after their complaints to Brussels on solvency II

European insurers are not after their complaints to Brussels on solvency II. The purpose of their irritation Again and again the terms of the directive intended to govern from 2012 their capital requirements from an economic measure of risk.

After typing heavily the fist on the table a month and a half to denounce the consequences would be implementing measures inadequate ("Les Echos" from March 11), they return to the Office today, with the same determination and new arguments. The European Commission give in effect all day the floor to the different stakeholders, in its public hearing on the famous steps, so-called "level 2".

Brussels has attempted to calm two weeks ago, with the publication of the préspécifications of the fifth quantitative impact study (QIS 5) which will take place from August to November ("Les Echos" from April 16 and 17). Wholesale, the Commission has opted for some calibrations and measurements was exactly midway between those of the QIS 4, on the basis of which the directive was passed a year ago, and the final notice of January last the European Committee of supervisors of insurance (Ceiops), unanimously criticised by the profession, as likely to lead to massive recapitalisations. A badly chipped rating which smooths things, but that is not be regarded as sufficient. "European Commission bought social peace out a draft specifications to avoid to show that Europe insurance would lack of capital, but could not be satisfied with this provok", reported yesterday the French Federation of insurance (FFSA) companies.

Relax calibrations

The profession, renowned pace at European level on the subject, wishes to be able to change things on three major types of topics for July 1, date of publication of the final specifications of the QIS 5. One, she wishes that the Commission adopt a less restrictive approach to prudential capital. Which implies that the future profits of the contracts in the portfolio ("in force") can be integrated in the Tier-1 ratio, as suggested elsewhere Brussels, and non-Tier-3 as the Ceiops envisaged. "It is all the more justified that it is on this basis that capital requirements are calculated", points out Bertrand Labilloy, Director of the FFSA international, financial and economic affairs. Another issue: achieving an adequate definition of the eligibility of hybrid debt in prudential capital and provide for transitional provisions to manage the existing stock.

Second objective: relax capital requirements calibrations, technical risks such as shipping, credit insurance or reinsurance, but also and especially on the market risk. Are so desired the removal of the impact of volatility on the actions and a downward revision of cargo (in strong increase in the préspécifications) applied to the obligations of business of A rating or less.

Last pane, ensure the adoption of measures avoiding any pro-cyclicality and distortion of competition, subjects on which the French are very advanced. Hence the idea of rehabilitating the "dampener" on the shares in the directive - wholesale, most load them top cycle, and vice versa - absent currently from the level 2 measures. Another measure taken by the European federations such as the CEA or the CFO Forum: that illiquidity premium principle, enjoyed by British insurers on life annuities, can be declined in all of the contracts. European insurers have until May 20 to pass their comments to the Commission and to try to convince her. To have no regrets.