Solvency II has been in place since 1 January 2016 and we are now beginning to see full public disclosure, with the first tranche of companies (those with June Year Ends) required to publish their Solvency and Financial Condition Report (SFCR) before the end of 2016. Such disclosure for most companies, those with December Year Ends, is not likely to emerge before May of this year.
The SFCR replaces the much loved (in certain circles) PRA Returns. Initial scrutiny of the first wave of these new documents reveals a document which contains more informative descriptive information than its predecessor, with welcome sections on business performance, governance and risk profile alongside solvency and capital disclosure, but with less actual data.
A risk based approach to regulation, Solvency II sees the introduction of a new solvency coverage ratio for us to use as part of our assessment process. Whilst there may be some relatively large differences in coverage ratios for some companies between the Solvency I and Solvency II regimes, the coverage ratio is only one criterion used in our assessments where a balanced scorecard approach is adopted, and as such we do not envisage any significant changes to our financial strength ratings.