PwC: Solvency II poised to take top spot for insurance reporting metrics

Published at 08:08 AM on 02 October 2015

Equity analysts have expressed an overwhelming preference to use Solvency II results as their primary metric for 31 December 2015 reporting. At a recent PwC breakfast briefing with the insurance equity analyst community to discuss the reporting implications of Solvency II, analysts were optimistic about the level of detail they could expect from the Solvency II disclosures. It was hoped that this would enable the volatility of cash generation and the fungibility of capital within a group to be better understood.

Shazia Azim, insurance partner at PwC, said:

“Insurance companies have been producing an ever increasing quantity of disclosures covering an array of metrics. The time has come to switch the focus back to quality. The message from the analyst community is clear: produce disclosures that communicate capital strength, future cash generation and sources of volatility with a clear link back to management’s risk appetite and overarching strategy. The pressure to publish Solvency II results is only going to increase in the coming months and failure to satisfy this demand is likely to be seen as a sign of weakness by investors.”

The analysts raised concerns over the comparability of Solvency II results both within the UK and across Europe. In particular, the outcome of internal model applications remains uncertain in many jurisdictions and different national practices are emerging in implementing the long-term guarantee package including the transitional measures. Whilst solvency ratios are likely to provide a high level snapshot of the strength of the business, the analysts noted the usefulness of results obtained under the Standard Formula to aid comparison across the sector. Indeed, several analysts commented that they were likely to request sight of these results.  

Charles Garnsworthy, insurance partner at PwC, said:

“The analyst community continues to have grave concerns over the comparability and relevance of insurance company results. They do not think Solvency II will bring a level regulatory playing field across Europe and the likelihood of business migrating cross border has thus increased. Companies need to design their reporting to clearly communicate the risks and capital in a way that helps investors to understand and compare performance. This regulatory change is a rare opportunity to develop common reporting approaches that will help the sector be valued more fairly.”

Ends                                                                                    

Notes to editors

Shazia Azim and Charles Garnsworthy are available for comment. Please contact Ellie Raven on [email protected] or +44 (0) 207 804 3663 

About PwC
PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
 
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
 
©2015 PricewaterhouseCoopers. All rights reserved.


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About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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