College of Supervisors: Legal Framework and Practical ......Source: Katz and Shapiro 1985,...

College of Supervisors: Legal Framework and Practical Experience

- Case Study from Home and Host Perspectives -

Klime Poposki Gorazd Cibej

University St. Kliment Ohridski Director of the

Macedonia Insurance Supervision Agency of Slovenia

Katie School Financial Regulators Program

June 17, 2020

Q&A

• Click on the arrow next to

Q&A located in the lower

right hand corner of your

screen.

• Type in your question in the

space provided.

• Click “Send.”

Note: Please make sure you

send your question(s) to “All

Panelists.”

Please Complete Our Survey!

Audio will be automatically streamed through your computer speakers.

Please leave this window open if you would like to listen to today’s presentation via audio

broadcast:

If you do not have computer speakers:

Call in to the teleconference (US/Canada only) at 1-844-740-1264 Enter Event Number 927 457 548

Note: For additional call-in numbers, please refer to your WebEx confirmation email.

If you are having trouble with either option, please submit your need for assistance in the Q&A section.

Audio

In keeping with the missions of The Institutes Griffith Insurance

Education Foundation and the Katie School of Insurance at Illinois

State, today’s program is strictly instructional in nature and does not

support a position on any issue.

Webinar Speakers

Presenter

Gorazd CibejDirector of theInsurance Supervision Agency of Slovenia

Presenter

Klime PoposkiUniversity St. Kliment OhridskiMacedonia

Moderator

Jim JonesExecutive Director, Katie School of Insurance and Risk Management, Illinois State University

Katie School Financial Regulators Program, June 17, 2020

Agenda

▪ Supervisory colleges – definition, history and purpose

▪ Legal Framework: ‒ IAIS and Supervisory colleges;‒ European Union insurance regulation and the role of EIOPA on Supervisory

colleges;

▪ Practical Experience:‒ Case study of Supervisory colleges participations – from home and host

perspective;‒ Future challenges;


Definition of Supervisory Colleges

▪ IAIS definition:“Forum for cooperation and communication between the involved supervisors, established for the fundamental purpose of facilitating the effectiveness of supervision of entities which belong to an insurance group; facilitating both the supervision of the group as a whole on a group-wide basis and improving the legal entity supervision of the entities within the insurance group”

▪ NAIC definition:“Supervisory colleges are joint meetings of interested regulators with company officials and include detailed discussions about financial data, corporate governance, and enterprise risk management functions. Supervisory colleges are intended to facilitate over-sight of internationally active insurance companies at the group level”

▪ EIOPA definition:“provide a platform for the gathering and dissemination of relevant or essential information in going concern and emergency situations, developing a common understanding of the risk profile of the groups, achieving coordination of supervisory review and risk assessment at a Group level as well as

establishing supervisory plans for the mitigation of risks at Group level”


History of the Supervisory colleges

▪ SUCOs were not first created as a result of the financial crisis, but to monitor financial institutions with cross-border operations;‒ the case of Bank of Credit and Commerce International

▪ The financial crisis has focused renewed attention on colleges of supervisors as one of several tools to reduce risk within the international financial system;

▪ G-20 has recommended the expanded use of SUCO to supervise SIFI as respond of the global financial crisis – joint communiqué March 31, 2009:

“supervisors should collaborate to establish supervisory colleges for all major cross-border financial institutions, as part of the efforts to strengthen the surveillance of cross-border firms. Major global financial institutions should meet regularly with their supervisory college for comprehensive discussions of the firm’s activities and assessments of the risks it faces”.


Cross-Border Insurance - Challenges for Supervision

▪ Insurance is traditionally an international business; ▪ Insurance is thus more international than banking;▪ Insurance is less subject to systemic risk and related externalities than banking. Moreover,

insurance is largely local business, as products are attuned to local tax, social security and legal rules (e.g. liability law);

▪ The results indicate that cross-border insurance is particularly advanced in Europe (at 32 per cent of total insurers’ GWP) and still rising;

▪ Cross-border operations through branches raise supervisory challenges;▪ Information asymmetry;▪ Cross-border operations through subsidiaries;▪ Level playing field.


Internationalization by countries

Market share of "foreign controlled undertakings" and "branches/agencies of foreign undertakings" in total domestic business in selected countries – Life and Non Life, 2018.

Source: OECD.Stat.


(Insurance) Groups as networks

Companies as nods, often domiciled in different jurisdictions

Shareholding, intra-group transactions and other exposures as so-called edges between the nods

Positive and/or adverse network effects are transmitted through the edges of the group

C1

C2

C4 C…..

C3

Cn

Source: Katz and Shapiro 1985, Economides 1996, Tempel-Gugerell 2009


Supervisory colleges as agents in the group supervisory process

Supervisory process includes

Individual jurisdictions’ actions

Bilateral interaction between supervisory

authorities

Multilateral interaction among supervisory

authorities involved in the supervisory college

Individual jurisdictions entrusted with enforcement powers


Wide spectrum of supervisory colleges

Ad hoc cooperation among two or more supervisors

Lightly coordinated group of supervisors, sharing information

Supervisory college developing and implementing common program by allocating different roles to the involved supervisory authorities

Supervisory college operating on the basis of common institutions (e.g. European Union)

Future formats


Role of a Supervisory College

▪ Purpose of a Supervisory College:‒ To facilitate group supervision;‒ To improve solo supervision ;‒ permanent forum for cooperation;‒ To facilitate improved understanding of supervisory practices and effectiveness of supervision;

▪ The Range of Functions of a Supervisory College:‒ Information sharing; Assessment of risk exposures, financial soundness and capital adequacy

and group governance, including risk management and internal control; Coordinated supervisoryactivities (for example, joint inspections); Specialization, special focus teams; Liaison with theinsurer management; Regular assessment of effectiveness.

▪ Supervisory college has no legal or binding authority as a decision-making body

IAIS work on group-based supervision


International standards on group-wide supervision and related topics

253

Supervisory Cooperation and Coordination

ICP 25.1.9: A mechanism for coordination of activities and cooperation among involved supervisors is through the

establishment of a supervisory college

Information Exchange and Confidentiality Requirements

23

26

Group-wide supervision

Cross-Border Cooperation and Coordination on Crisis Management


• The coordination arrangements with involved supervisors on cross-border issues on a legal entity and a group-wide basis in order to facilitate the comprehensive oversight of these legal entities and groups.

ICP 25 – Supervisory Cooperation and Coordination

Establishment of a “supervisory college” of involved supervisors

The primary purpose to discuss supervisory issues and exchange information

Whether and when to establish a

supervisory college and Form and

operational structure of a

supervisory college

European Union insurance regulation and the

role of EIOPA on Supervisory colleges


Insurance group supervision in the European Union

▪ Group structures have emerged as a common feature of the insurance industry:

‒ growth in mergers and acquisitions since 1990s;

‒ foreign-controlled insurance companies hold a significant market share, confirms the growing internationalnature of the insurance;

‒ groups facilitate international diversification and generate broader market opportunities;

▪ However, significant risk emerged;

‒ subject to group policies that can be favorable for the group but not for the entities taken individually;

‒ the size of the group may also incentivize morally hazardous behaviors based on a “too-big-to-fail” perception;

‒ multi-tiered group structures and the possible lack of transparency of the group organization may rendersupervision more complex;

‒ risks related to intra-group transactions;

‒ contagion risk;


Evolution of insurance group supervision in the EU

▪ The Third Life and Third Non-Life Insurance Directives (1992) limited the scope of insurance supervision to the financial situation of the individual companies;

▪ Insurance Groups Directive (1998) - adoption of common basic rules on insurance group supervision;

▪ Helsinki Protocol (2000) on the collaboration of the supervisory authorities of the EU member states with regard to supplementary supervision;

▪ CEIOPS’ Guidelines (2005) for Coordination Committees which highlighted the central role that a lead supervisor can play especially in gathering and analyzing information relevant for group supervision;


Group –wide supervision under Solvency II

▪ Solvency II insurance directive was approved by the EU Parliament in 2009, but it was introduced on January 2016;

▪ The supervision of individual (re)insurance undertakings remains the essential principle of insurance supervision;

▪ However, Solvency II introduces a system of consolidated supervision that rests on the concept of the group as a single economic entity rather than a collection of entities;

‒ group supervision applies at the level of the ultimate parent undertaking which has its head office in the EU;

‒ calculation of group solvency

‒ rules on the supervision of the system of governance at the group level;

‒ ORSA at the group level is mandated;

‒ institutionalizes the role of the group supervisor; ‒ establishing of the supervisory college in order to facilitate the oversight of the group, to foster cooperation, exchange

of information and consultation between the group supervisor and the other supervisors involved;

‒ The role of European Insurance and Occupational Pensions Authority (EIOPA) as a member of the supervisory colleges;


The role of EIOPA

▪ EIOPA is an independent advisory body to the European Commission, the European Parliament and the Council of the European Union;

▪ Mission statement:‒ Better protecting consumers, rebuilding trust in the financial system;‒ Ensuring a high, effective and consistent level of regulation and supervision taking account of the varying interests of

all Member States and the different nature of financial institutions;‒ Strengthening oversight of cross-border groups;‒ Promote coordinated European Union supervisory response;

▪ EIOPA and Supervisory colleges:‒ EIOPA has a coordinating role in the supervision of international insurance groups;‒ Takes the lead in setting secondary rules and harmonizing supervisory practices across Europe, in particular with

regard to Solvency II;‒ EIOPA participates in the supervisory colleges of cross-border insurance;‒ In the case of disagreement on the group internal model in the supervisory college, EIOPA can give advice.


▪ Section I: Establishment of the college

▪ Section II: Initial meeting of the college

▪ Section III: On-going functioning of the college

▪ Section IV: Joint and local examinations Schedule of the initial meeting;

▪ Section V: Sharing and delegation of tasks

▪ Section VI: Connection between prudential supervision and macro surveillance

➢ ;

EIOPA Guidelines on operational functioning of colleges


Coordination arrangements template

▪ Definitions: group supervisor; supervisory authority; third-country supervisory authority; members; participants; group; college; specialized team;Helsinki plus list.

▪ Scope and objectives

▪ Principles

▪ Description of the group

▪ Contact details of members and participants

▪ Responsibilities of members and participants

▪ Confidentiality, secured communication channels and information exchange

▪ Functioning of the college: In on-going supervision; In time of crisis‒ General procedures for consultation and decision making;

‒ College work plan, sharing and delegation of tasks and specialized teams;

‒ Joint on-site examinations;

‒ Assessment of compliance of the group with requirements on solvency, risk concentration and intra-group transactions;

‒ Decision making process on the group internal model application and preparation of the joint decision;

‒ Choice of the calculation method of the group SCR and determination of the proportional share;

‒ Communication on the imposition of a capital add-on under Article 232 of the Solvency II Directive;

‒ Application for centralized risk management under Article 238 and 239 of the Solvency II Directive;

▪ Miscellaneous provisions


Insurance groups identified by the EIOPA

▪ There are a total of 82 insurance groups (Dec.31, 2019) for which a college of supervisorsis in place;

▪ Home countries with the most subsidiaries or other related undertakings in a group are:Allianz Group, Generali Group, MetLife EU Holding Company Limited, Münchner RückGroup, which have up to 19 subsidiaries in countries other than the home country;

▪ Home countries in total 38 with only 1 subsidiary in a country other than the homecountry.


The case study

Colleges of Supervisors refer to multilateral groups of relevantsupervisors that are formed for the collective purpose ofenhancing efficient, effective and consistent supervision offinancial institutions operating across borders.


Colleges – practical example – explanation

Practical example is presented under following assumptions:

• hypothetical college group is presented by• Insurance company A (parent company, member, located in EEA)• Insurance companies B and C (subsidiaries, participants, located in non EEA)• other insurance companies, not included in college due to unsignificancy

• presentation is limited to some chosen slides, just to give the idea, • how the data are exchanged (obligations of group supervisor and other supervisors)• how the data are compiled and analysed (obligation of group supervisor)• how the data are presented at the college (obligation of group supervisor with assistance of

other supervisors)

• the main purpose of the whole process is:• to assess risk profile of the group and of the individual entities• to assess possible future risks (both at the group and at the solo level)• to prepare work plan for main supervision activities (at the group and at the solo level,

regardless if on or off site).


Colleges – practical example –agenda for supervisory college meeting

Timetable Topic

8:45 – 9:00 Coffee and Registration

9:00 - 9:15Welcome and introduction by group supervisor

Approval of minutes of last meeting, adoption of Agenda

9:15 – 10:30

Presentation by group supervisor

- Summary of data and information exchange –group level

- Key issues and risk assessment – group level

Information/ Discussion

10:30 – 11:00 Coffee break

11:00 – 12:30 Management presentation of XXX Group and discussion Information/ Discussion

12:30 – 14:00 Lunch break

14:00 – 16:00Roundtable presentation by subsidiaries supervisors

- Key issues – local subsidiaries levelInformation/ Discussion

16:00 – 16:15 Coffee break

16:15 - 17:00

College work plan

- Main supervisory activities 2020 - 2021

- On-site and joint on-site examination plan

- Off-site work planning

Information/ Discussion

17:00 – 17:15 Wrap up and closing remarks (by group supervisor)

Agenda for college is prepared

by group supervisor and

disseminated to members and

participants soon enough;

members and participants

should have oppurtunity for

additional propositions and

ammendments to the agenda


Colleges – practical example Basic information about XXX Group (from Group's SFCR for 2018):

Fit & proper requirements:

- assessment of the members of MB and SB as collective bodies as well as the key function holders performed in 2018?, (compliance

with the rules, criteria and procedures for fit&proper assessment laid down in internal acts);

- frequence of the process for the f&p assessment of management bodies and KF holders?

(regular - prior to the award of the term of office, perodic - during the term of office and extraordinary - in case of circumstances that

raise doubts as to their f&p status);

- assessment of management bodies members and KF holders in terms of:

. fitness criteria (professional qualifications, experience, competences) and

. suitability criteria (clean criminal record, professional reputation, goodwill and personal integrity).

Supervisory Board Committees:

- The Audit Committee (... members, one of them independent external expert);

- The Appointments and Remuneration Committee (... members);

- The Strategic Committee (...members);

- ...

- changes in 2018?

XXX Group

XXX Group is insurance-financial group in ... region. It operates in ... countries. Group's strategic activities are insurance (L, NL,

H, reinsurance, pensions) and asset management (own portfolio and mutual funds).

Some more significant changes in the group's structure in 2018:

…

Management Board of the Group's parent company:

- changes in 2018: ...

- the remuneration policy: ...

Supervisory Board of the Group's parent company:

- no. of members:

- chairman of Supervisory Board: ...

- the term of office of Supervisory Board members: ... years, with no limitation for reelection;

- changes in 2018?

Basic information on Group is

presented by Group supervisor

(source of information may be

SFCR, Annual Report, …). Basic

information should contain at

least data on significant

changes in group structure, in

management structure, in key

functions holder and in main

activities


Colleges – practical example –analysis on dataset exchanged

Basic instruction and information:

Table 2: Please fill in basic information

Name of the group XXX Group

Reporting reference year 2018

Parent entity Insurance company A

Group supervisor Agencija za zavarovalni nadzor

Local supervisor Supervisor 1

Country Country 1

E-mail address xxx

Phone number xxx

Filled in by xxx

Local currency EUR

Exchange rate for EUR 1

For additional information and help please click on relevant cell to see definitions and/or help.

The template is created for the information exchange and the risk assessment process performered within group

college.

Please fill in all the data regarding supervised entities, available to your authority, and present all the

information you assess relevant for specific topics. Fill in only the data in blank (white) cells. Format of cells is

already set.

Please quote all the figures reported in the templates in EUR using relevant exchange rate

Please send completed templates to AZN until Oct. 1st 2019.

Each supervisor states basic

information about relevant

supervisory authority.

Only the data in blank (white)

cells should be filled in.



Basic information on entities supervised:

Business activity

Market

share

Market

ranking

Market

ranking

Market

ranking

(composite, L, NL,

reinsurance) % Life Non-life

Insurance Company A Composite 25 1 3 1

Insurance Company B NL 6 5

Reinsurance Company C Reinsurance 30 2

Supervised entity

Please state significant changes in 2018, if any (new supervised entities, significant changes in market share etc.:


information about entities

supervised.

At the college joint

presentation is given from the

templates filled in by individual

supervisor authorities.



Key figures for 2018 total (IFRS income statement and IFRS balance sheet)

Supervised entity

Key figure/ratio

Gross written premium 1.500.000.000 900.000.000 300.000.000 260.000.000

Gross claims 1.000.000.000 500.000.000 250.000.000 140.000.000

Costs 400.000.000 240.000.000 40.000.000 7.000.000

Net result 150.000.000 110.000.000 2.900.000 9.000.000

Total assets 4.000.000.000 2.400.000.000 120.000.000 580.000.000

Technical provisions 2.000.000.000 1.200.000.000 30.000.000 340.000.000

Total capital 1.300.000.000 900.000.000 65.000.000 160.000.000

Gross claims ratio 0,67 0,56 0,83 0,54

Cost ratio 0,27 0,27 0,13 0,03

Combined ratio 0,93 0,82 0,97 0,57

Return on equity 11,5% 12,2% 4,5% 5,6%

Please state significant changes in 2018, if any ( significant raise of GWP, significant changes of ratios, etc.):

Key figures in EUR

XXX Group

Insurance

Company B

Reinsurance

Company C

Insurance

Company A


key figures from entities'

annual reports.







Chart 4d: Ratio comparison

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

1,00

Gross claims ratio Cost ratio Combined ratio

XXX Group

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

Gross claimsratio

Cost ratio Combined ratio

Insurance Company A

s

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

1,00

Gross claimsratio


Insurance Company B

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

1,00

Gross claimsratio


Reinsurance Company C

All ratios and charts are

generated automaticcaly from

the data filled in by supervisory

authorities.



Assets structure 31. 12. 2018 (SII balance sheet, IFRS if SII balance sheet is not available)

Supervised entity XXX Group

Insurance

Company A

Insurance

Company B

Reinsurance

Company C

Total assets 6.400.000.000 4.500.000.000 120.000.000 500.000.000

Property & equipm. for own use 200.000.000 140.000.000 5.000.000 20.000.000

Property (other than for own use) 190.000.000 100.000.000 0 0

Holdings in related undertakings 160.000.000 730.000.000 0 0

Equities - listed 100.000.000 90.000.000 0 4.000.000

Equities - unlisted 20.000.000 20.000.000 0 0

Bonds - governement 2.000.000.000 1.400.000.000 60.000.000 160.000.000

Bonds - corporate 1.800.000.000 1.600.000.000 50.000.000 180.000.000

Collective investments undertakings 45.000.000 40.000.000 0 0

Deposits & cash 180.000.000 80.000.000 1.000.000 3.000.000

Loans & mortgages 80.000.000 90.000.000 0 0

Assets held for index- and unit linked

contracts 1.200.000.000 110.000.000

Other assets 425.000.000 100.000.000 4.000.000 133.000.000

Significant changes in 2018, if any (significant increase of specific assets, change in level of more risky assets, etc.):

Key figures in EUR


key figures either from

entities' SII or from annual

reports.







XXX Group Insurance Company A Insurance Company B

Chart 5b: Comparison of asset structure for 2018


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%



Single exposures to issuers above 1 % of assets (or 10 most significant exposures)

XXX Group

Name of the issuer

Issuer 1 700.000.000 11,8% 11 2

Issuer 2 480.000.000 8,0% 11 2

Issuer 3 180.000.000 3,1% 11 4

Issuer 4 175.000.000 3,0% 11 3

Issuer 5 110.000.000 1,8% 11 3

Issuer 6 80.000.000 1,3% 11 3

Issuer 7 75.000.000 1,2% 11 5

Issuer 8 70.000.000 1,2% 11 0

Issuer 9 65.000.000 1,1% 21 9

Issuer 10 60.000.000 1,0% 4x not stated

All the exposures 1 % of assets or more 1.995.000.000 33,5% weigh.average: 3

Figures in EUR

Comments:

…

CIC groups: 11 = sovereign bonds, 21 = corporate bonds, 4x = collective investment undertakings

(equity funds, bond funds, real estate funds, …)

Total exposure

31.12.18

Type of assets

(CIC group)

Credit quality step

(0-9 or not stated)

Percentage

of all assets

Credit quality step: 0 - 3 = investment grade, 4 - 6 = under investment grade, 9 = not rated

…

Each supervisor states

siggnificant exposures to

counterparties of the entities'

either from SII or other

reports (if available).


presentation is given both for

exposures at group and at solo

levels (if available)



Gross written premium by line of business for 2018 (SII ARS/ARG reporting if available; IFRS reporting if not)

Supervised entity

Line of business

Fire and other damage to … 340.000.000 280.000.000

Motor vehicle liability 320.000.000 180.000.000

Other motor insurance 300.000.000 240.000.000

Medical expense 280.000.000 2.000.000 278.000.000

Income protection 140.000.000 100.000.000 400.000

General liability 85.000.000 65.000.000

Other 132.000.000 0 0 0

Insurance - non life total 1.597.000.000 867.000.000 278.400.000 0

Index-linked & unit-linked insurance 180.000.000 160.000.000

Insurance with profit participation 130.000.000 110.000.000

Other life insurance 25.000.000 13.000.000

Insurance - life total 335.000.000 283.000.000 0 0

Reinsurance non-life proportional 260.000.000 50.000.000 210.000.000

Reinsurance non-life non proportional 50.000.000 1.000.000 49.000.000

Reinsurance life 2.000.000 1.000.000 1.000.000

Reinsurance total 312.000.000 52.000.000 0 260.000.000

Significant changes in 2018, if any ( significant raise of GWP of specific line of business, etc.):

GWP in EUR

XXX Group

Insurance

Company B

Reinsurance

Company C

Insurance

Company A

Each supervisor states gross

premium of the entities' by

business lines either from SII

or other reports (if available).


presentation is given both for

group and for solo gross

premiums by business lines (if

available)



21,3% Fire and other damage to … 32,3% Fire and other damage to … 0,0%

20,0% Motor vehicle liability 20,8% Motor vehicle liability 0,0%

18,8% Other motor insurance 27,7% Other motor insurance 0,0%

17,5% Medical expense 0,2% Medical expense 99,9%

8,8% Income protection 11,5% Income protection 0,1%

5,3% General liability 7,5% General liability 0,0%

8,3% Other 0,0% Other 0,0%

100,0% Insurance - non life total 100,0% Insurance - non life total 100,0%

53,7% Index-linked & unit-linked insurance 56,5% Index-linked & unit-linked insurance #DEL/0!

38,8% Insurance with profit participation 38,9% Insurance with profit participation #DEL/0!

7,5% Other life insurance 4,6% Other life insurance #DEL/0!

100,0% Insurance - life total 100,0% Insurance - life total #DEL/0!

83,3% Reinsurance non-life proportional 96,2% Reinsurance non-life proportional #DEL/0!

16,0% Reinsurance non-life non proportional 1,9% Reinsurance non-life non proportional #DEL/0!

0,6% Reinsurance life 1,9% Reinsurance life #DEL/0!

0,0% 0,0% #DEL/0!

0,0% 0,0% #DEL/0!

100,0% Reinsurance total 100,0% Reinsurance total #DEL/0!

#DEL/0! Insurance - non life total #DEL/0! Insurance - non life total #DEL/0!

#DEL/0! Insurance - life total #DEL/0! Insurance - life total #DEL/0!

#DEL/0! Reinsurance total #DEL/0! Reinsurance total #DEL/0!

#DEL/0! Total gross written premium group #DEL/0! Total gross written premium group #DEL/0!

XXX Group Insurance Company BInsurance Company A

Chart 6b: Strucure of gross written insurance premium by line of business for 2018

21,3%

20,0%

18,8%

17,5%

8,8%

5,3%

8,3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Structure of GWP

Other

Generalliability

Incomeprotection

Medicalexpense

Other motorinsurance

Motorvehicle

liability

Fire and other damage to

…

32,3%

20,8%

27,7%

0,2%

11,5%

7,5%

0,0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Structure of GWP

0,0%0,0%0,0%

99,9%

0,1%0,0%0,0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Structure of GWP



Capital and main shareholders as per 31.12. 2018

Total capital (as per IFRS reporting) in EUR: 900.000.000

Number of shares: 40.000.000

Are the shares listed (yes/no): Yes

If yes, where are they listed: ABC SE

Market capitalization in EUR: 1.400.000.000

Main 3 shareholders: Share in %

1. shareholder A 35,0%

2. shareholder B 28,0%

3. shareholder C 7,0%


Number of shares: 1.200.000


1. Parent company 100,0%


Number of shares: 15.000


1. Parent company 100,0%

Significant changes in 2018 (changes due to profit/loss, recapitalization, sales of shares, …

Insurance Company A

Insurance Company B


Each supervisor states data on

share capital and siginificant

shareholders. In case of

significant changes additional

comments should be given.


presentation is given for all the

entities



Own funds 31. 12. 18 (eligible own funds and required solvency capital - SII or local jurisdiction requirements)

Supervised entity

own funds/ratios

SII eligible own funds 1.600.000.000 1.900.000.000 n.a. n.a.

SII required solvency capital 780.000.000 650.000.000 n.a. n.a.

SII minimum required capital 320.000.000 250.000.000 n.a. n.a.

SCR ratio (SII) 2,05 2,92 #VREDN! #VREDN!

MCR ratio (SII) 5,00 7,60 #VREDN! #VREDN!

Eligible own funds - local rules n.a. n.a. 65.000.000 210.000.000

Required solvency capital - local rules n.a. n.a. 40.000.000 80.000.000

Required minimum capital - local rules n.a. n.a. 15.000.000 30.000.000

SCR ratio (local rules) n.a. #VREDN! 1,63 2,63

MCR ratio (local rules) n.a. #VREDN! 4,33 7,00

in EUR

Significant changes in 2018, if any (change in capital levels and in ratios, ...):

XXX Group

Insurance

Company B

Reinsurance

Company C

Insurance

Company A

Basic information on solvency

capital requirements and

minimum capital requirements

should be stated either on basis

of SII or on basis of local

regulatory requirements.



43

SCR ratio (SII) 2,05 2,92 #VREDN! #VREDN!

MCR ratio (SII) 5,00 7,60 #VREDN! #VREDN!

SCR ratio (local rules) n.a. #VREDN! 1,63 2,63

MCR ratio (local rules) n.a. #VREDN! 4,33 7,00

XXX Group

Insurance Company

A

Insurance Company

B

Reinsurance

Company C

Chart 8a: SCR and MCR ratios 31. 12. 2018 ( SII or local jurisdiction requirements)

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

XXX Group Insurance Company A Insurance Company B Reinsurance Company C

SCR and MCR ratios 31. 12. 2018

SCR ratio (SII)

MCR ratio (SII)

SCR ratio (local rules)

MCR ratio (local rules)



Structure of solvency capital requirements in accordance with SII standard formula 31. 12. 2018

Type of risk module for net SCR XXX Group

Insurance

Company A

Insurance

Company B

Reinsurance

Company C

Net solvency requirement for market risk 400.000.000 460.000.000 6.000.000 21.000.000

Net solvency requirement for

counterparty default risk 100.000.000 120.000.000 800.000 9.000.000

Net solvency requirement for life

underwriting risk 125.000.000 110.000.000 0 130.000

Net solvency requirement for health

underwriting risk 100.000.000 54.000.000 40.000.000 2.500.000

Net solvency requirement for non-life

underwriting risk 320.000.000 210.000.000 0 70.000.000

Diversification -360.000.000 -300.000.000 -4.000.000 -20.000.000

Intangible asset risk

BSCR before diversification 1.045.000.000 954.000.000 46.800.000 102.630.000

Basic solvency capital requirement 685.000.000 654.000.000 42.800.000 82.630.000

Adjustments for RFF 10.000.000 1.000.000

Operational risk 70.000.000 40.000.000 800.000 8.000.000

Loss absorbing capacity of TP -340.000

Loss absorbing capacity of deferred taxes -60.000.000 -55.000.000 -9.000.000 -13.000.000

Risk of companies from other fin. sec. 40.000.000

Risk of residual companies 15.000.000

Solvency capital requirement 759.660.000 640.000.000 34.600.000 77.630.000

in EUR

Significant changes in 2018, if any:

Data on capital requirements

by specific modules according

to SII standard formula will be

probably available only for

supervisied entities in EEA



Chart 9b1: Structure of basic SII capital requirements (without diversifications between modules) - in % by risk modules

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

Net solvency requirement formarket risk

Net solvency requirement forcounterparty default risk

Net solvency requirement for lifeunderwriting risk

Net solvency requirement forhealth underwriting risk

Net solvency requirement for non-life underwriting risk

XXX Group

Insurance Company A

Insurance Company B


Risk profile on SII standard

formula basis will be probably

available only for supervisied

entities in EEA



Chart 9b2: Structure of basic SII capital requirements (without diversifications between modules) - in EUR by risk modules

0

50.000.000

100.000.000

150.000.000

200.000.000

250.000.000

300.000.000

350.000.000

400.000.000

450.000.000

500.000.000

Net solvency requirement for market risk

Net solvency requirement for counterpartydefault risk

Net solvency requirement for lifeunderwriting risk

Net solvency requirement for healthunderwriting risk

Net solvency requirement for non-lifeunderwriting risk

XXX Group Insurance Company A Insurance Company B Reinsurance Company C

Risk profile on SII standard

formula basis and the

significance of capital

requirements of individual

entities in the total group's

solvency capital requirements.



Significant intragroup transactions in 2018

XXX Group

Disclosed in quantitative template ARG - S.36:

Disclosed in ORSA (chapter xxx of ORSA):

Disclosed in Annual Report:



Insurance company …

Disclosed in quantitative template ARS - S.36:

Basic information on significant

intragroup transactions -

where to obtain them?

What are threshold for

reporting?

If thresholds are not defined,

narrative explanation is

needed.



Significant risk concentrations at group level in 2018

XXX Group


…


Geographically: most significant is exposure to geographic area A (both from investment and from insurance activity):

. cca ... % of all investments of group are placed in geographic area A (... % in geographic area A sovereign bonds), followed

by exposure to investments in geographic area B (... % of total group investments, ... % in geographic area B sovereign bonds)

and geographic area C (... % of total group investments, ... % in geographic area D sovereign bonds);

. ... % of group's GWP is collected in geographic area A (followed by geographic area B - ... % and geographic area D - ... %),

. ... % of all of the group exposure to earthqakes claims relate to geographic area A (followed by geographic area B with ... %

and geographic area C with ... % of total earthquake danger exposure).

Disclosed in ARG - S.37: …

Insurance risks:

Non-life insurance risks: …

Life insurance risks: …

Health insurance risks: …

Credit risks: refer mainly to exposures to banks and (outside) reinsurers, which are well dispersed.

Potential risks (disclosed in chapter ... of ORSA):

…

Information on risk

concentration at the group

level should be assessed and

presented by group supervisor



Own entity's risk assessment (from latest ORSA report)

Latest ORSA report submitted in December 2018

Description of ORSA process Well described

Description of risk profile Well described and substaintiated

Description of individual risks Well described and substaintiated

Standard formula suitability ORSA is based on SF, some USP are used

Deviations from SF in ORSA Deviations in ORSA assessment:

- spread risk (SF +- ... mio EUR),

- currency risk (SF +- ... mio EUR),

- non-life insurance risks (SF +- ... mio EUR)

- ...

Final assessment of capital needs In ORSA ... mio EUR (SF +- ... mio EUR, i.e. cca ... % higher/lower SCR);

SCR ratio ... % (SF) --> ... % (ORSA)

Futur capital needs assessment Analitically assessed till 2022; expected SCR ratio will fall/rise from ... % in 2017 to ... % in

2022.

Stress tests performed EIOPA stress test for 2018 (rise in risk-free rate, rise in spreads, fall of equity and property

value, rise of lapses, rise of inflation and indexation) results in lower ... ratio (... % in SF

calculation, ... % in ORSA calculation);

X stress test: results in SCR ratio ... % under SF, ... % under ORSA;

Y stress test: results in SCR ratio ... % under SF, ... % under ORSA;

...

Key findings from ORSA 2018:

XXX Group

Insurance Company …

Presentation of significant

features of ORSA reports &

assessment of quality of ORSA

reports

(there will probably be

differences in ORSA reports for

EEA and non EEA entities due

to different regulatory

frameworks)



Main risk types Score ImpactWeighted

score

Most significant criteria for score 1 (best

score)

Most significant criteria for score 4 (worst

score)Explanation

1. Macroeconomic risks 2,3 10 23 10 40

1.1. Macroeconomic environment

general 2Very stable local macroeconomic environment

Very turbulent and unpredictable macroeconomic

environment

1.2. Changes in legislation, if relevant3

No significant changes expected Probability of negative changes is very highPotential change

in …

1.3. Changes in macroeconomic

environment, if relevant 2No significant changes expected Probability of negative changes is very high

1.4. Other macroeconomic risk, if

relevant (please explain)No significant changes expected Probability of negative changes is very high

2. Capital strength 1,3 20 27 20 80

2.1. Capital solvency ratio 2 SCR ratio > 2,5 SCR ratio < 1

2.2. Capital add ons assured if needed1

Strong owners, not expected problems if

recapitalization is needed Weak and/or very dispersed owners

2.3. Rentability (ROE)1

Net income IFRS/(average capital IFRS) > 10 % Net income IFRS/(average capital IFRS) < 0 %

2… Other issues with capital if relevant

(please explain)

Please give your explanation where relevant; explanation is obligatory if score is 3 or 4.

13. OVERALL RISK ASSESSMENT FOR XXX Group Instructions:

Please only fill in coloumns "score" and "explanation" (if relevant).

Possible scores are 1 (best score), 2, 3 or 4 (worst score). Explanations for best and worst scores for specific areas assessed are given below.

Please always give score for overall assessment of area (red coloured). Please do not score positions you don't have sufficent information, leave them blank, so that such score won't be considered in assessment.

Final supervisory authotities'

qualitative risk assessment

both at the group and at the

solo level of individual entities.

"Bad marks" should be

explained.



continued …


score


score)


score)Explanation

3. Market & counterparty risks 1,8 25 44 25 100

3.1. General assessment of market

risks2

Asset-mix is not risky (high % of assets with

high credit quality and high marketability)

High % of risky assets (e.g. unlisted

equity/venture and/or not exchange traded

funds/not collaterized loans …)

3.2. Interest rate risk

2

Average duration of bonds and loans (that

represents gap between assets and liabilities

duration)< 2 years

Average duration of bonds and loans (that

represents gap between assets and liabilities

duration) > 5 years

3.3. Equity risk1

Proportion of unlisted equity < 3 % assets,

listed equity is highly marketable

Proportion of unlisted equity > 10 % assets, listed

equity has low turnover

3.4. Property risk2

Proportion of property < 5 % assets, property is

of high quality and marketable

Proportion of property > 20 % assets, property is

of bad quality and/or not marketable

3.5. Spread risk

2

Average bonds and loans have high quality

grade (credit quality 3 or more) and low

duration

Avergae bonds and loans have low quality grade

(NR, 6 or less) and long duration

3.6. Currency risk

2

Proportion of mismatch between assets

denominated in foreign currencies and

libailities in foreign currencies < 5 % assets

Proportion of mismatch between assets

denominated in foreign currencies and liabilities

nominated in foreign currencies > 20 % assets

3.7. Market risk concentration1

Low exposure to individual issuers and to risky

asset classes

High exposure to individual issuers, asset

portfolio not dispersed enough

3.8. Counterparty default risk 2 Low probability of counterparty default High probability of counterparty default

3.9. Other market risk (e.g. liquidity

risk, reinvestment risk, profitability risk

etc.), (please specify)



continued …


score


score)


score)Explanation

4. Insurance risks 1,9 20 37 20 80

4.1. Overall assesment of insurance

risks

2

Good insurance portfolio mix (well dispersed

among business lines and low claim and

combined ratio), insurance contracts well

dispersed geographically and among individual

insurees

Insurance portfolio is concentrated in few

insurance classes with high cobined ratios,

insurance contracts concentrated geographically

and among individual insurees

4.2.1. Expected future claims horizon

non-life products 1Main non-life business lines with "short tails" Main non-life business lines with "long tails"

4.2.2. Combained raitos non-life

products 2

Combained raitos in main non-life business

lines are < 70 %

Combained raitos in main non-life business lines

are > 100 %

4.2.3. Dispersion non-life products2

Main non-life insurance contracts are

geographically well dispersed

Main non-life insurance contracts are

geographically concentrated

4.3.1. Dispersion of life products 3 Life products are well dispersed

4.3.2. Expected lapses for life productsLow lapses rate in first three years of the

contract for life products

4.3.3. Exposure to guaranted benefits for

life products 2Low exposure to guaranted benefits

4.4. Health underwriting risk - contract

boundary 1

Contract boundary for health products =< 1

year

4.5. Other insurance risks (e.g.

reinsurance risk etc.), (please specify)



continued …


score


score)


score)Explanation

5. Governance & strategic risks 1,8 15 28 15 60

5.1. Overall assessment of

management system, risk managing,

internal controls, key functions and

strategic orientation

2

Management system is sound and reliable and

includes:

- clear, precisely defined organisational

structure with clear separation of duties and

responsibilities

- efficient system of information transfer

- key functions efficiently integrated in the

organisational structure

- risk management strategy, written rules,

processes and procedures

- measures that ensure regular and permanent

functioning of operations

Management system is not reliable and has

serious deficiencies regarding:

- defined organisational structure and separation

of duties and responsibilities and/or

- system of information transfer and/or

- key functions integration in the organisational

structure and/or

- risk management strategy, written rules,

processes and procedures and/or

- measures that ensure regular and permanent

functioning of operations

5.2. Internal control processesInternal controls for all key processes are

formally well defined and are well functioning

Internal controls for key processes are not

formally defined and/or are not functioning

5.3. Management (AMSB and goverance)

2

All members of AMSB and management are in

line with fit & proper criteria, fluctuation rate

is low

Members of AMSB and management are not in

line with fit & proper criteria, fluctuation rate is

high

5.4. Key functions risk2

Key functions are in line with fit & proper

criteria, fluctuation rate is low

Key functions are not in line with fit & proper

criteria, fluctuation rate is high

5.5. The risk of human resources2

High quality and low fluctuation rate for human

resources

Low quality and/or high fluctuation rate for

human resources

5.6. Compliance risk

1

Robust structure of internal regulation,

compliance with regulatory and overall legal

requirements

Internal regulation is poorly designed (either

unsufficent or exaggerated and/or non

consistent), often non-compliance with

regulatory and/or overall legal requirements

5.7. Outsourcing risk

2

Key processes and functions are not

outsourced, outsourced processes/functions

are well managed

Many key processes/ functions are outsourced,

outsourced processes/functions not well

managed

5.8. Other governance risk if relevant

(please specify)



continued …


score


score)


score)Explanation

6. Operational risks incl. IT 2,0 10 20 10 40

6.1. Overall assessment of operational

& IT risks 2Operational and IT risks are non significant High exposure to operational and/or IT risks

6.2. The risk of new products 2 Low rate of new products introduced High rate of new products introduced

6.3. IT risks

2

Well designed and fully in-house operated IT

system, recovery plans well designed and

tested

High exposure to ousourced IT processes with

low control and high exposure to IT failures

6.4. Legal risk

2

New regulation (e.g. SII, IDD, PRIIPS, IPID, …)

is promptly and fully implemented, low rate of

lawsuits

New regulation (e.g. SII, IDD, IPID, …) not

promptly/fully implemented and/or high rate of

lawsuits

6.5. Other operational risk if relevant

(please specify)

Overall risk assesment 100 178 100 400

Overall risk assessment for parent company and for each of the subsidiaries is also made by local supervisors.



Main risk types XXX Group Insurance Company

A

Insurance Company

B

Reinsurance

Company C

1. Macroeconomic risks 23 20 23 23

2. Capital strength 27 20 20 20

3. Market & counterparty risks 44 47 25 29

4. Insurance risks 37 23 50 40

5. Governance & strategic risks 28 23 15 28

6. Operational risks incl. IT 20 18 18 10

Total risk points 178 150 150 150

Main risk types XXX Group Insurance Company

A

Insurance Company

B

Reinsurance

Company C

1. Macroeconomic risks 2,3 2,0 2,3 2,3

2. Capital strength 1,3 1,0 1,0 1,0

3. Market & counterparty risks 1,8 1,9 1,0 1,2

4. Insurance risks 1,9 1,1 2,5 2,0

5. Governance & strategic risks 1,8 1,5 1,0 1,8

6. Operational risks incl. IT 2,0 1,8 1,8 1,0

Total risk assessment: 1,8 1,5 1,5 1,5

Structure of main risks for group and for entities

Significance of main risks for group and entities

Comparison of qualitative risk

assessment at the group's and

at the solo entities' level =

basis for planning future

supervisory activities



2019

Proposed college work plan, based on data analysis and risk assessment for the group and for individualundertakings in group (priorities):

• at the group level no major risks were identified for main risk types,

• for all of the insurance companies strategies how to mitigate macroeconomic risks should beexamined,

• for Insurance Company B detailed analysis of insurance risks should be made (off- site examination on basis on regular reporting data, on-site examination if relevant),

• for Insurance Company A detailed analysis of market & counterparty risks should be made (off- site examination on basis on regular reporting data, on-site examination if relevant),

• for Insurance Company C analysis of insurance risks and governance & strategic risks should be made(off- site examination on basis on regular reporting data, on-site examination if relevant).


Insurance Supervision Agency of Macedonia –host supervisor perspective

▪ Precondition for participation as a Non EU country:‒ EIOPA did professional secrecy equivalence assessment and found ISA’s regulatory and

institutional capacity as largely observed. This enabled ISA to sign MoUs and CAs with NCAs;

▪ Participation of ISA on Colleges of supervisors:‒ Slovenia – Insurance Supervision Agency is group supervisor for TRIGLAV (non life and life) and

SAVA (non-life);‒ Austria – Financial Market Authority is group supervisor for VIG (two non-life and one life),

UNIQA (non-life and life) and GRAWE (two non-life and one life);‒ Bulgaria – Financial Supervision Commission is group supervisor for EVROINS (non-life);

▪ Special cases without formal establishment of SUCO:‒ Croatia – Financial Services Supervisory Agency - recognized bilateral cooperation (MoU) / not

established college because there is no need to do it in accordance to SII;‒ Albania – Financial Supervision Agency is group supervisor for EUROSIG (non-life);


Benefits

▪ Opportunity to get familiar with practical aspects of implementation ofSolvency II requirements from perspective of EU member statesupervisory authority

▪ Opportunity to learn new supervisory cultures and to compare nationalsupervisory practice with the best practice of more developed markets

▪ Opportunity to compare with other non-EU supervisory practices and tolearn from others failures and successes

▪ Being part of SuCo means changing the supervisory practice▪ From compliance-based towards risk-based approach▪ Risk assessment performed by local supervisors just add value to the

compliance assessments and serve as an early warning tool to preventexcessive risk exposures and unfavorable development of undesiredevents



• First attempt to do the risk assessment resulted in risk matrix with only “green zones”

• No previous experience in rating and scoring of insurance companies using this new risk-based approach.

Risk assessment of

Company A in MACEDONIAInsurance Group

Date of performance of the risk assessment 04.10.2017

An overall risk score of undertaking2

Main risk types Risk Score (A)

Management and Control

Score (B)

Macroeconomic risk 1 1

Market risk 2 1

Credit risk 2 1

Insurance risk 2 1

Governance risk 1 1

Operational risk 2 1

Strategic risk 1 1

IT risk 1 1

Other risk (please specify)

file:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Guidance A1, A2, A, B & Cfile:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Guidance A1, A2, A, B & Cfile:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Risk Assessmentfile:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Guidance A1, A2, A, B & Cfile:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Risk Assessment



• Now, the risk assessmentsare more conservative andcouscous when scoring theinsurance companies andtheir capacity to managethe risks

Insurance company A

Date of performance of the risk

assessment: 2019

Main risk types Risk Score (A)

Management and Control

Score (B)

Macroeconomic risk 2 2

Market risk 3 1

Credit risk 3 4

Insurance risk 5 3

Governance risk 4 1

Operational risk 2 2

Strategic risk 3 2

IT risk 6 1

Other risk (please specify)

file:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Risk Assessmentfile:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Guidance A1, A2, A, B & Cfile:///C:/Users/kosta.spaseski/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/EJCZO3Y2/Risk Assessment


In 2016 ISA conducted an assessment of the corporate governance of all insurance companies operating in Macedonia. This assessment was done according to the IFC matrix on corporate governance. The average score of the insurance companies in Macedonia was 46, the score for X company non-life was 42, and for X company life was 41. Major part of policies and functions of the corporate governance are not established in both undertakings, although as part of a group it is expected that both undertakings should have established written policies and risk management and compliance key functions by now.In the last quarter of 2018 there were changes of the presidents of the management boards in both companies.CEO of X company non-life has left the position, and now the former CEO of X company life was appointed as CEO of X company non-life.Few months before, the appointed actuary of X company non-life had left the position and a new actuary was appointed. The last report submitted by the former actuary revealed significant weaknesses in the claims provisioning process and significant concerns over the financial position of the company because of the lack of excess of assets of good quality to support the continuity in operations.In X company life one of the members of the management board became a CEO, and also a new actuary was appointed.

Assessment of the system of governance

Highlighted issuesBoth undertakings don't have a clear business strategy and written policies for identification, measurement, mitigation and reporting for risks. Both undertakings have not appointed a person responsible for monitoring the risks and reporting about the risks identified. They formally adopt policies for risk management annually, but, in practice lacks activities related to risk management.

Highlighted issues


Assessment of the system of governance

Highlighted issues

Internal audit and actuary function have been established and are functional, but proper compliance and risk management functions are missing in both undertakings.The work of the internal auditor and the appointed actuary in both undertakings is not supported by more staff, so both undertakings are exposed to risks of continuity in operations of the key functions.Last on-site inspection in X company non-life (2018) revealed significant weaknesses in the functioning of the internal controls in the process of collection of premium receivables for issued motor TPL insurance policies, and in the claims handling.

S II is still not implemented in Macedonia

Highlighted issues


Supervisory actions

Supervisedentity Topic of on-site Date/Period Status

X company non-life

Investments, claims, underwriting and administrative expenses, IT

September 2017/1.1.2016-30.6.2017

On 19.11.2018 ISA issued an administrative act - Order to eliminate the irregularities found during the on-site inspection. In accordance to the law, the company has to report to the ISA on each finding during a 4 months time period (at latest by 19.3.2019) in order to prove that it had complied with the regulation.

X company life

Within the scope of the on-site inspection in X company non-life, performed in September 2017, were the financial operations of the undertaking, claims handling, consumer complaints and compliance with IT requirements. The report from this on-site inspection was communicated to the company at 7.3.2018. The company submitted a letter to the ISA, dated 22.3.3018, containing their views on the findings. On 19.11.2018, ISA has issued an Order to eliminate the irregularities and a pecuniary fine. The company has a four months time period to comply with the regulation and report back to the ISA. For some of the findings that relate to weaknesses in the functioning of the systems of internal control, shorter deadlines were given to foster faster implementation of the recommendations. Some of the main findings include: - incompliance with the requirements for identification, valuation and reporting for receivables from policyholders. In addition, the Undertaking does not perform periodical confirmation of open balances with debtors/creditors which creates risks for proper valuation of receivables; - significant amount of premium paid in cash has been transferred to the Undertaking's accounts with delays of more than 10 days;- restricted for use deposits in local banks has been recognized as assets covering technical provisions (given guarantees by the Undertaking in processes of public offer of insurance services);- deficiencies in the claims and complaints handling processes;- risks for errors has been identified due to the manual processing of financial data from investment activities (risks of errors in financial reports due to recognition of income and costs from investments in bank deposits and Government securities);- risks for errors arising from approximations used when recognizing acquisition costs and their deferrals (acquisition costs are not recognized in the reporting periods when they occur, but rather in the periods when the Undertaking would arrange submission of invoice from the broker/agent.

Does the group management recognize the same concerns as the local supervisors do, with regard to the financial position and the financial ability to support the continuity of operations of company XXX (the non-life insurance subsidiary), having in mind the current structure of assets and liabilities in the balance sheet, and the short term plans for expenditures in order to implement SAP and to support the growth of insurance business in lines of business other than motor TPL insurance?

Questions to the group management

The structure of the asset side of the balance sheet of X company non-life is a serious threat to the capacity of the company to absorb unexpected losses or to cover the expected costs deriving from the short term plans for future investments in IT (planned investments in IT systems for accounting and reporting, introduction of SAP, etc.) and human capital (planned changes in the structure of insurance portfolio that require expertise in the underwriting and distribution, which might be expensive to implement). The amount of assets with good quality is just equal to the amount of net technical provisions, and the excess of assets over the net technical provisions is not of that quality as the assets covering the net technical provisions.

Additional information


Challenges from host supervisors' perspective

• Different regulatory frameworks with regard to solvency, accountingand reporting requirements is one of the most critical issuesidentified so far;

• From the aspect of a group-wide supervision, the operations of thesupervised legal entities in host supervisor jurisdiction might not beconsidered as materially significant;

• The communication and sharing of information with regard to theintra-group transactions should be improved;

• Poor underwriting and claims management practices in hostjurisdiction are often neglected at Supervisory colleges;

• Poor corporate governance model in subsidiaries;• Positive examples from participation in SuCo is raising the importance

of this issue, with a positive outcome and improved flow ofinformation between the management levels within the group;


Challenges from home supervisors' perspective

Which authorities should be included in college?Decision is based on the assessment of the significance and materiality of branches and related undertakingsGuarantees for confidentiality and professional secrecy should be obtained from all the collegemembers and participants!

How to consider different reportingrequirements for EEA and non EEA subsidiaries?Due to different reporting requirements (SI and SII environment) templates for information exchangeshould be carefully prepared to assure adequacyand comparability for selected items.

Question and Answer Segment

Presenter

Gorazd CibejDirector of theInsurance Supervision Agency of Slovenia

Presenter

Klime PoposkiUniversity St. Kliment OhridskiMacedonia

Moderator

Jim JonesExecutive Director, Katie School of Insurance and Risk Management, Illinois State University

Thank you

Klime Poposki Gorazd CibejEmail: [email protected] Email: [email protected] www.a-zn.si
mailto:[email protected]:[email protected]://www.uklo.edu.mk/http://www.a-zn.si/

Date post:	05-Oct-2020
Category:	Documents
Author:	others
View:	0 times
Download:	0 times

College of Supervisors: Legal Framework and Practical ......Source: Katz and Shapiro 1985,...

Documents

7th Edition - Pinheiro Neto Advogados€¦ · 46 Cyprus E & G Economides LLC: Marinella Kilikitas & George Economides 292 47 Denmark Nielsen Nørager Law Firm LLP: Thomas Melchior

R2000 - Tempel Group

Dualmode Transportation Dr. Christine Ehlig-Economides.

[Economides] the Economics of Networks

Natural Gas Flare-Ups: Present & Future 07, 2010 · Petroleum Production Engineering PROF. M. J. ECONOMIDES Natural Gas Flare-Ups: Present & Future Michael J. Economides ©2010

Edited by Spyros Economides - LSE Home Spyros Economides Director, Hellenic Observatory, LSE. 01 >>Costas Simitis Assessing the present while mapping the future: Reflections on …

Alexandros Vasiliou and Anastasios A. Economides* Vasiliou and Anastasios A. Economides* Information Systems Department, University of Macedonia, P.O. Box 1591, Egnatia 156, ...

Economides, M and Hill, A - Petroleum Production Systems

Petroleum Production Systems -Michael j. Economides

Gouden Tempel India

Energy Geopolitics by Economides

Steve & Annette Economides ONE SHEET & Annette Economides NY TIMES BEST SELLING AUTHORS, NATIONAL SPEAKERS, MEDIA PERSONALITIES, FAMILY FINANCE EXPERTS, SPOKESCOUPLE Steve …

Jakob Lorber Three Days in the Tempel

Tempel Ov Blood - Tales of Sinister Influence

55026066 Tempel Ov Blood Tales of Sinister Influencem

Materials Management, Rogers, AR Overview Name:Curt Tempel Date:May 2012.

EUGENE R. TEMPEL - Lilly Family School of Philanthropy · EUGENE R. TEMPEL . Office Address Founding Dean Emeritus and Professor of Philanthropic Studies . Indiana University Lilly

Scanned by CamScanner...TEMPEL REJO TELADAN TEMPEL REJO WATAS MARGA TEMPEL REJO RIMBO RECAP TEMPEL REJO TELADAN Ds BAMBANG OKTARIANTO, s.sos RANDY REZA VAHLEVI NAMA KECAMATAN : CURUP