Keeping above the capital floor

Keeping above the capital floor

Walking on stilts

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The move to the fair valuation of assets and liabilities is one of the fundamental changes that Solvency II brings. Assets will be valued on a mark-to-market basis, while technical provisions in respect of insurance liabilities will be based on a discounted best estimate of expected future cashflows. And since markets can be volatile, so too will be Solvency II’s economic balance sheet. 

As a result, insurers’ capital levels – at a basic level, the excess of

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