Thursday, 9 August 2012

FTSE Insurers and Solvency II at interim-time - 'Oops I spent it again'

While the politicians and eurocrats are having a well earned soak in the August sun before they pick up their Omnibus II cudgels again, the rest of the Solvency II world has to continue with the more mundane tasks of counting beans and predicting the future.

On that basis, the great and good of UK Insurance plc have been comparing abs this week on both cost and go-live date, with the following revelations;

Legal and General
  • "...expect implementation [of Solvency II] could be later than 2014"
  • On track to submit IMAP by end 2012 - guessing this means a large amount of tedious rolling forward of balance sheets, SCR etc for the guys in 2013 in order to meet FSA application requirements
  • £23m spent on "Investment Projects" for the half year, predominantly related to Solvency II - pro-rated, this is down slightly on 2011's total spend of £56m.
Old Mutual
  • Bermuda's new capital regime (fishing for equivalence of course) has obliged the Group to send capital to Bermuda itself, reducing their FGD surplus.
  • Seem confident that the overhanging Omnibus arguments (equivalence, discount rate methodology, contract boundaries) will affect its SCR surplus
  • "...increasing risk of delay in the Solvency II timetable beyond January 2014"
  • "...currently on track to deliver all requirements for Solvency II compliance"
  • No word on project costs as such
  • Costs associated with preparing the businesses for Solvency II for the half year of (eeeekk!) £72m (as opposed to just under £100m for all of 2011)
  • Note that a draft of the Level 2 implementing measures were "published in 2011" - I wouldn't call unofficial circulation via national trade organisations "publication" as such!
  • Implementation date "...continues to be discussed"
  • Content that go-live is still scheduled for 2014
  • Interesting, calibrating their EC model to 1-in-1,250, which doesn't copy the vogue of 1-in-2,000 which appears to have landed with larger firms, I guess to save the ratings agencies having to work a bit harder!
  • £16m of Solvency II costs for the half year 
  • "...currently anticipated to be implemented from 1 January 2014"
  • "...continue to evaluate actions, including continuing consideration of the group's domicile"
  • Total of £27m spent on Solvency II implementation costs in the half year
  • £48m at half year - their bigger news on exiting IMAP until 2015 is covered on this blog post.
Standard Life
  • £42m at half year for Solvency II and RDR "restructuring programmes" - RDR is a beast in itself, so may be difficult to attribute a portion of that cost, though the guys were in the £50m+ bracket for all of 2011.
  • Little in the way of additional Solvency II comment
Royal London
  • £9m in "corporate costs", which includes Solvency II, but doesn't cover all by any stretch
  • No additional comment

Some big money getting laid down right now, which was no doubt budgeted as tapering-off by now in previous budgets, alongside (no doubt well briefed) messages of uncertainty on go-live date - let's hope we get it right kids!

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