Solvency II Update For Asset Managers

After a few quiet months Solvency II is back in the spotlight, following regulatory and industry developments. Additionally, stagnating yields are pushing institutional investors to explore new asset classes and to seek capital-efficient allocations, creating challenges (and opportunities) for asset managers.

This article will look at some recent Solvency II developments set to affect regulation practices, investment products, and reporting solutions. The developments involve:

the new version (4.0) of the Tripartite Template for Solvency II asset data reporting EIOPA's advice on the Solvency II delegated regulation the simple, transparent, and standardised (STS) securitisation regulation and its integration into Solvency II The Tripartite Template, revised

The Tripartite Template is the financial reporting standard that several major asset manager associations across Europe have endorsed as the reference means for exchanging investment information that helps (re)insurers meet Solvency II reporting obligations.

This template has been revised now for a fourth time, with the purpose of enhancing the informative power of the report and updating it with recent regulatory updates. The changes are minor but important: computational aspects are affected, as are (potentially) the data-sourcing efforts required by filers. Industry associations expect this new version to be operative from September 2018.

More scrutiny of data quality and completeness

One of the most conspicuous updates to the template is that it now requires a "by asset type" logic (based on CIC or more complex conditions), which means more stringent and specific completion rules for each field. While this may make it harder for asset managers to complete the template, the change will ultimately improve quality and comparability of the circulated reports.

Asset managers reporting on (re)insurance companies in Germany and Switzerland: you will also have to account for specific reporting requirements related to BaFin's Nachweisung 675 and FINMA's solvency test, respectively.

Prospects for alternative asset managers

Also new in the template: asset managers can pre-indicate, in their portfolios, the qualification statuses of infrastructure investments. This update is in line with Solvency II's goal of promoting such investments with a favourable capital requirement for "qualified" infrastructure equity and debt assets.

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