On 19 May, Milliman UK hosted an in-person Life Practice Forum.
The agenda included presentations on the latest developments from HM Treasury and the PRA in relation to the UK’s review of Solvency II, capital generation and return metrics in Europe, key considerations for the Life Insurance Stress Test (LIST 2022), current issues in Part VII transfers, and an economic and market update.
Solvency II Review
Russell Ward (Russell.ward@milliman.com) & Florin Ginghina (florin.ginghina@milliman.com)
In this session we will provide an update on the latest developments from HM Treasury and the PRA in relation to the UK’s review of Solvency II.
Capital Generation and Return Metrics in Europe
Stuart Reynolds (stuart.reynolds@milliman.com) & David Burston (david.burston@milliman.com)
The disclosure of capital generation metrics that represent the change in a valuation metric over time (e.g., the growth in Solvency II Own Funds over a financial year) have become increasingly popular in recent years, with many firms disclosing a Solvency II earning metric or Solvency II Capital Generation metric on a regular basis. These metrics are useful for a variety of purposes, from benchmarking against competitors and understanding the stability of the drivers of capital generation to assessing the capacity for paying dividends and making distributions.
This presentation will outline the findings from their research in this field, which has focussed on the value metrics and capital generation and return measurement metrics used by European life (re)insurers. This session will:
- Provide an introduction to Solvency II-based valuation metrics and to capital generation and return metrics.
- Set out the results from a Milliman Mind model developed to calculate a range of Solvency II valuation metrics using public data, based on a sample of the largest insurance groups in Europe over a two-year period from year-end 2018 to year-end 2020.
LIST – Life Insurance Stress Test 2022
Jessica Crowson (Jessica.crowson@milliman.com) & Florin Ginghina (florin.ginghina@milliman.com)
In January 2022, the PRA launched the second and final request for technical input for the Insurance Stress Test (IST 2022). The Life Insurance Stress Test (LIST 2022) is due to be launched in May of this year, with responses required to be submitted by September.
In our previous session for the March webinar, we provided an overview of the LIST 2022 exercise and shared the results of some high-level analysis we undertook to quantify the impacts for the four stages underpinning LIST 2022. In this session, we will provide further analysis of the results, including assessing property risk. We will additionally quantify the impact of certain management actions. We will provide key considerations for the report that firms are required to complete for this exercise, including risk appetite, management actions and key messages.
Current Issues in Part VII transfers
Robert Bugg (Robert.bugg@milliman.com) and Philip Simpson (Philip.simpson@milliman.com)
Could the eventual sanction of the Prudential/Rothesay Part VII transfer of annuities in November 2021 mean that it is back to business as usual when it comes to transfers of insurance business? And what is the future for cross-border insurance business transfers post-Brexit? In this talk we will discuss recent developments in the area of Part VII transfers, including the implications of the Prudential/Rothesay transfer on the market for back-book annuity transfers and issues affecting cross-border transfers. We will also discuss the implications of the recent regulatory guidance on Part VII transfers.
Economic and Market update
Neil Christy (neil.christy@milliman.com) & Nima Shahroozi (nima.shahroozi@milliman.com)
This session will start with a brief roundup of current key indicators of economic performance and how they have moved over the recent past. This will be followed by a summary of market conditions and a look at what current market indicators imply for the path of future experience.