Report on Solvency (IPA SA)

In recent years, the European Union has developed a new regulatory framework for European insurers that came into effect on January 1, 2016. Directive 2009/138/EC of the European Parliament and the Council of November 25, 2009, known as the "Solvency II" Directive, was amended in 2014 by Directive 2014/51/EU, the "Omnibus II." This regime is designed to establish capital requirements that better reflect the risks faced by insurance companies and to provide a common supervisory framework for all Member States of the European Community. The Solvency II regulatory framework is based on three main pillars: Pillar 1 aims to define quantitative standards for calculating technical provisions and own funds, Pillar 2 aims to set qualitative standards for monitoring the inherent risks of insurance companies. It also describes how the supervisory authority should exercise its oversight powers, including the obligation for insurers to publish a report on their own risk assessment and solvency (ORSA report). This report is used by regulators during their supervisory process; and Pillar 3 aims to define all the detailed information accessible to the public and to the supervisory authorities for exercising their oversight. The publication of the SFCR by insurance companies is part of compliance with regulatory requirements, particularly Pillar 2, of the Solvency II standard. The Solvency II regulatory framework covers, among other topics, the valuation of assets and liabilities, the treatment in the case of an insurance group, the definition of capital, and the level of capital required.