SFCR — Initial experiences overview

17 July 2017

In May 2017, all German solo insurance companies were required for the first time to publish selected reporting forms as part of Solvency and Financial Condition Reporting (SFCR)—insurance groups followed at the end of June. These reports did not only include a huge amount of data on specific Solvency II risk figures but also comprehensive information about general business development, qualitative explanations on the presented figures and on the financial, solvency and business situation. Aside from the obligation to publish own Solvency II results, insurance companies now for the first time have the opportunity to compare their Solvency II results with direct competitors.

The publication of SFCR reports also gives stakeholders access to Solvency II reports who did not have insight into these results before, for instance rating agencies, sales partners, customers, media and creditors. The extension of the target group has two main consequences for insurance companies: firstly, Solvency II results need to be explained to an audience that has little experience with Solvency II—unlike insurance supervisors who had exclusive access to Solvency II results until now. Secondly, the solvency ratio becomes increasingly important as a material piece of information from SFC reports.

Due to the flood of information available in the SFC reports and the lack of experience of many market participants, it can be expected that processing Solvency II results will be mainly restricted to the evaluation of the solvency ratio as the core result of Solvency II. In particular, it was revealed that individual insurance companies are already actively using the solvency ratio in sales. The attention given to the solvency ratio by the public will increase even further in the future if ratios approach the critical 100% threshold due to reduced interim measures.

For the initial analyses of impact mechanisms with respect to the solvency ratio please visit zeb's resource section at bobsguide.