Axa results and economic capital measures - indication of things to come?

So results season kicked off today with Axa putting the basic full year out (got to love European efficiency on these matters!). This was followed by the EEV Report and Analyst Presentation.

Of particular interest is of course the Solvency I vs Economic Capital measures which most insurers are now kind enough to table up, and the figures were pretty stark. On the Solvency I measure they were a touch up year-on-year, while their Economic Capital measure was massively down (numbers on first page, rationale on third).

Detail on their Economic Capital (and indeed their entire Capital Management Strategy) was fired out in 2010 as part of an investor day. They appear to be using the 1-in-200 stress as their EC measure, which would suggest that (model approval notwithstanding) they have received a 'beasting' on their SCR coverage over 2011.

I blogged in August last year about an FT article which opined on how companies may approach economic capital targets under Solvency II (125-150% of SCR in UK, and perhaps 170% in mainland Europe was their conclusion, for what its worth). While that would have put Generali fractionally out at the time, most of the other big boys were comfortably covered using that yardstick...until now!

The rationale for the drop presented goes to adverse experience on interest rates and spreads "net of changes to the liquidity premium". A smarter man that me will probably be able to read between the lines on that one to find where they are exposed in a way that leads to such a swing in EC, but if one of the major lobbyists is experiencing this volatility, what chance the rest of us?

NB - Generali punted this round today in order to contextualise the recent downgrading activity of insurers by the ratings agencies - surprising to see a company lump all of their competitors onto a press release from their own offices, but I guess there is safety in numbers! Few comments on Solvency on it, but mostly seems to be about negative outlooks on Eurozone default possibilities, new business and economic conditions etc