EIOPA issued an opinion on the solvency position of (re)insurance undertakings, in light of the withdrawal of the UK from the EU.
https://eiopa.europa.eu/Publications/Opinions/EIOPA-BoS-18-2018_opinion_on_solvency_and_Brexit.pdf
Summary
- EIOPA reiterates that, for the purposes of applying Solvency II, the UK will become a third country once it exits the EU.
- In this context, national supervisory authorities are urged to ensure that (re)insurance undertakings identify, measure, monitor, manage and report the risks arising from the UK becoming a third country.
- The opinion identifies 14 key areas of regulatory risk that could emerge post-Brexit, including the potential impact on derivatives and on credit ratings issued by UK-based agencies.
- EIOPA also notes that the own funds and capital requirements of UK (re)insurance undertakings can be expected to change, as Solvency II will no longer apply to them.
- At the same time, the own funds and capital requirements of EU27 (re)insurance undertakings are also expected to change due to the UK’s departure.
Next steps
- EIOPA, in conjunction with NCAs, will monitor the risks for the solvency position of (re)insurance undertakings arising from the UK becoming a third country on an ongoing basis.