Brussels, 26/03/2009 (Agence Europe) - On Thursday 26 March 2009, representatives of the EU Member States' to the EU agreed in principle on the draft Solvability II directive on the European insurance industry, agreeing to the final requests made that morning by the European Parliament, which is the co-legislator for Solvability II, for changes in the calculation of the minimum capital requirements (MCR). The EP's response to the MCR question made it possible to reach agreement with the Council in the form of a statement by the European Commission and a statement by the Duchy of Luxembourg, sources informed EUROPE. This will be a satisfactory, but not ideal, directive, commented the EP rapporteur, Peter Skinner (PES, UK) in an interview with EUROPE. The deal will be endorsed next week at a meeting of COREPER and voted upon at the end of April by the EP in the form of a single amendment. Once the directive has been adopted, the Commission will publish application measures that should enable the rules to come into force in the EU in October 2012.
The political agreement does not include group support measures that were backed by the EP, the Commission and industry itself (see EUROPE 9864). Fourteen Member States, mostly from central and Eastern Europe, do not want a mechanism that would weaken the powers of the national watchdogs. It has been decided that the rules will be revised three years after they come into force, which will make it possible to include the group support measures, explained Peter Skinner. If it decides to introduce new legislation, the Commission will take account of the current examination of the EU financial supervision systems.
MCR. In line with the required solvability requirements (RSR), the MCR will range from 25% to 45% of RSR. In its response to the Council, the EP says the change in the percentages put forward by the Council is unacceptable. Luxembourg and Malta argue for 25% to 50%. On the risk of investments on the stock markets, the directive allows calculation methods for the capital requirements based on a 'duration approach' rather than the risk approach. Insurers would be able to sell life-insurance policies for the purposes of providing retirement pensions in countries where this is allowed, as long as this business is ring-fenced and the average duration of ownership of assets is at least twelve years. One expert said this marked a victory for France. Welcoming the fact that these measures are only an 'option' for mss, Peter Skinner mentioned the EP's concern to avoid the creation of an uneven playing field for insurance companies not using the duration approach. (M.B.)