Arnaud Faller, 
Chief Investment Officer 

Insurers will be impacted by the new regulatory framework due to come into effect on January 1st 2016. Yet, Solvency II has caused a Big Bang that is affecting the entire ecosystem: asset managers have to cope with this regulation, and help their investors to do so.

When did you start working on Solvency II?

In 2010, we were contacted by insurance companies as they started to look for market data to complete a series of quantitative impact studies (QIS). Then, in 2013 with the LTGA assessment. We worked a lot in order to apprehend this regulation, which was changing, and complicated to understand. We discussed a lot with insurers regarding the impact of Solvency II on the markets. Very early on, we began regulatory benchmarking work to ensure we were ready to help our clients manage this transition.

Vincent Bonnamy
Fund manger of the strategy 

What are the challenges implied?

This regulatory turmoil is affecting the largest European investors, as insurance company assets widely exceed those managed by pension funds – which don’t exist in France or Germany. The main constraint for insurers in this new context is to justify the presence of minimum capital in light of their risk profile: the SCR. The market SCR is by far the primary contributor to the total SCR in life-assurance, weighting 67% in Europe and even 86% in France. For non-life insurers, the market SCR still accounts for 52% on a pan-European basis and 43% in France In 2014, during preparatory work on reporting, the ACPR highlighted the need to improve on this aspect This involves industrialising the reporting process, particularly as the information required may change. Another important fact: insurers will need to provide written information on the qualitative characteristics of their risk strategy in the ORSA report. Only the largest insurance players were able to allocate vast resources to the I n-depth understanding of Solvency II. And yet, this involves learning a new language, and asset managers will have to adapt to these challenges...