Pillar 3

DISCLOSURES

The new rules require insurers to disclose certain information publicly to a far greater extent than currently is the case. This is intended to bring in 'market discipline', which will help to ensure the soundness and stability of insurers, as market players will be able to exercise greater supervision over and offer greater competition to other insurers. It is felt that insurers applying 'best practice' are more likely to be rewarded by lower financing costs, for example.

The Directive requires publication of an annual report on solvency and financial condition. The report must disclose the following information:

a description of the business and the performance of the undertaking.
a description of the system of governance and an assessment of its adequacy for the risk profile of the undertaking.
a description, separately for each category of risk, of the risk exposure, concentration, mitigation and sensitivity.
a description, separately for assets, technical provisions, and other liabilities, of the bases and methods used for their valuation, together with an explanation of any major differences in the bases and methods used for their valuation in financial statements.
a description of the capital management, including at least the following:

the structure and amount of own funds, and their quality.
the amounts of the MCR and of the SCR (a well as the option used for the calculation of the SCR).
information allowing a proper understanding of the main differences between the underlying assumptions of the standard formula and those of any internal model used by the undertaking for the calculation of its SCR.
the amount of any non-compliance with the MCR or any significant non-compliance with the SCR during the reporting period, even if subsequently resolved, with an explanation of its origin and consequences as well as any remedial measures taken.