Why insurance regulators are split on sovereign risk

Regulators in Europe disagree over whether and how internal model firms should be modelling sovereign risk. As one CRO puts it: ‘It depends which side of the Alps you are on’

tug-of-war2

The treatment of sovereign risk is an anomaly in the Solvency II directive that few in the industry expect to last. But regulators remain divided over what to do about it.

Because sovereign bonds are considered risk-free in the standard formula, insurers can theoretically hold no capital against them and avoid admonition from their supervisors. But some regulators, such as Carlos Montalvo, executive director at the European Insurance and Occupational Pensions Authority (Eiopa), have recently

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The future of life insurance

As the world constantly evolves and changes, so too does the life insurance industry, which is preparing for a multitude of challenges, particularly in three areas: interest rates, regulatory mandates and technology (software, underwriting tools and…

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