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Eiopa 'doesn't care' about solvency req

Thursday 8 December 2011 - by

The European insurance watchdog says it "does not care" whether insurers meet the solvency capital requirement included in the Solvency II directive as long as they meet minimum capital requirements.

Speaking at an Association of British Insurers conference on Thursday, European Insurance and Occupational Pensions Authority executive director Carlos Montalvo Rebuelta said that Eiopa's work in 2012 would continue to focus on the minimum capital requirement rather than the SCR.

"I don't care about the SCR. I care about capital, I care about information and proper reporting, I don't care about the SCR," he told the London audience.

The MCR is the minimum level of capital an insurance firm must hold. If it drops below this threshold, supervision action will be triggered. The SCR is a buffer set at a threshold above the MCR. Though a firm is allowed to fall below it, supervisors are still likely to intervene depending on the severity of the breach.

But Rebuelta's comments suggest that there would be less supervisory intervention or action if a firm does fall below the SCR than previously thought.

Speaking at a panel session later in the conference, HM Treasury deputy director of insurance and savings Bridget Micklem said that despite Eiopa's comments, she feels it is important to have these two levels of capital requirements.

She said: "I would have thought it was quite important to have a solvency capital requirement."

Chairing the debate, Standard Life chief financial officer Jackie Hunt said: "The MCR was always the base level and the SCR was always the buffer."

While CEA director general Michaela Koller remarked: "It was always meant to be a soft target. You have your minimum requirements and then way above this, you have the SCR."

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