“Insurers are expected to hold eligible owned funds in excess of the Solvency Capital Requirement. There are two main methods of calculating the SCR under Solvency II, the standard formula and internal model methods.”

In this episode of “The Standard Formula” podcast, Rob Chaplin, host and head of Skadden’s Europe Financial Institutions Group is joined by colleague George Belcher to discuss Solvency II’s internal models (IM). Despite a higher cost of development, IMs offer numerous benefits, such as more accurate risk sensitivity, more flexibility and more available data. Rob and George also explore partial IMs, changes to existing models, the PRA approval process and implications of the U.K.'s move away from EU Solvency II standards.

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob is the head of Skadden’s Financial Institutions Group in Europe. He primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

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Name: George Belcher

What he does: George is European Counsel in the Financial Institutions and Insurance Groups at Skadden. He focuses on insurance-related public and private acquisitions and private equity investments, as well as regulatory issues in the insurance sector. He also frequently advises on matters related to Lloyd’s of London.

Organization: Skadden

Words of wisdom: “A firm may choose a partial IM where a particular aspect of its business does not fit well within the standard formula.”

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

“The Solvency Capital Requirement, or SCR, is designed to protect policyholders by helping to make sure that insurers can survive difficult periods and pay claims as they fall due.”

In this episode of "The Standard Formula" podcast, Rob Chaplin, host and head of Skadden’s Europe Financial Institutions Group, is joined by colleague Will Adams as they take an in-depth look at the Solvency Capital Requirement, one of Solvency II’s most important and complex provisions. The discussion covers the SCR’s key features, risk modules, how it’s calculated and its relationship with the Minimum Capital Requirement (MCR). They also discuss the standard formula (for an in-depth discussion of technical provisions, listen to the previous episode).

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob is the head of Skadden’s Financial Institutions Group in Europe. He primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

Name: Will Adams

What he does: Will is a trainee solicitor in the Financial Institutions Group at Skadden.

Organization: Skadden

Words of wisdom: “The SCR can be calculated by either using the standard formula prescribed by the PRA rulebook and Solvency II, or by using a PRA-approved internal model bespoke to the company concerned.”

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

“Technical provisions are crucial, as they form the fundamental basis for assessing the financial stability of insurance and reinsurance plans.”

In this episode of “The Standard Formula” podcast, Rob Chaplin, host and head of Skadden’s Europe Financial Institutions Group, is joined by colleague Mary Bonsu. Rob and Mary delve into the complexities of technical provisions under Solvency II, shedding light on crucial elements such as best estimate of liabilities and risk margins. They discuss factors influencing these elements, such as financial guarantees, future management actions and risk-free interest rate term structures.The conversation also touches on methods to mitigate short-term volatility, and contrasts Solvency II with IFRS 17.

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob is the head of the Financial Institutions Group in Europe primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

Name: Mary Bonsu

What she does: Mary is a trainee solicitor in the Financial Institutions Group at Skadden.

Organization: Skadden

Words of wisdom: “Technical provisions can be seen as an insurer's main reserves.”

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

The U.K.’s investment rules for insurers and reinsurers have become particularly interesting due to recent proposals for reform relating to U.K. sovereignty and the ESG movement.

In this episode of “The Standard Formula” podcast, host and Skadden partner Rob Chaplin is joined by colleagues Ben Lyon and Verena Mengis. Tune in as Ben and Verena delve into a wealth of topics, including the prudent person principle (PPP) in the context of the U.K.'s Solvency II investment rules. Discover the key aspects of PPP and how it applies to insurers' and reinsurers' asset portfolios. Learn about investment rules specific to derivatives, securitizations and assets held to cover linked policies, along with related regulatory changes and their impact on the insurance sector. The episode concludes with a critical discussion on sustainability risks and the integration of ESG concerns into investment rules.

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures, and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

Name: Ben Lyon

What he does: Ben is a counsel in the Financial Institutions Group at Skadden, where he focuses his practice primarily on transactional and advisory work in the insurance sector. He has extensive experience working on insurance and asset management-related public and private mergers, acquisitions and joint ventures, reinsurance transactions, regulatory matters and investigations, corporate governance issues, debt and equity capital markets transactions and other corporate matters in the U.K. and internationally.

Organization: Skadden

Words of wisdom: “The PRA expects that an insurer's response to financial risks from climate change be proportionate to the nature, scale, and complexity of their business, and that their approach to managing the financial risks from climate change will mature and will develop over time.”

Connect: LinkedIn

Name: Verena Mengis

What she does: Verena is a trainee solicitor in the Financial Institutions Group at Skadden.

Organization: Skadden

Words of wisdom: “Since Solvency II came into force, a less prescriptive, but more market favored regime applies to investment rules, to which the prudent person principle is central.”

Connect: LinkedIn

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In September 2023, the U.K.'s Prudential Regulation Authority (PRA) released its second consultation paper on reforms to the Solvency II regime for U.K. insurers. These reforms relate to the use of the Matching Adjustment, a mechanism that adjusts the discount rate that can be applied to the valuation of an insurer’s insurance and reinsurance obligations.

In this episode of the “The Standard Formula” podcast, host and Skadden partner Rob Chaplin is joined by colleague Theo Charalambous to discuss the intricacies of the U.K.'s Matching Adjustment regime for insurers, including the rationale behind it, which liabilities are eligible, existing conditions and how it’s calculated.

In case you missed it, be sure to listen to the last episode, which covered groups, and stay tuned as our next installment will focus on investment rules.

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures, and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

Name: Theodoulos Charalambous

What he does: Theo is an associate in the Financial Institutions Group at Skadden where he counsels insurers, brokers and private equity sponsors on mergers and acquisitions, disposals, investments, reorganizations, alternative transaction structures and multijurisdictional regulatory matters.

Organization: Skadden

Words of wisdom: “The Matching Adjustment is an adjustment to the discount rate that can be applied to the valuation of an insurer's insurance and reinsurance applications in certain specific conditions.”

Connect: LinkedIn

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

This episode of the “The Standard Formula” podcast is the fourth in the “Back to Basics” series focusing on developments in the Solvency II regime. Skadden partner Rob Chaplin is joined by colleague Feargal Ryan to explore the complexities of group supervision under Solvency II.

Rob and Feargal begin with a discussion of the circumstances under which the U.K. Prudential Regulation Authority (PRA) rules on group supervision will apply to a group, followed by a look at methods for calculating group solvency. They also cover how own funds requirements operate at a group level, and conclude the discussion by considering the application of group supervision at group level under various scenarios.

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures, and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

Name: Feargal Ryan

What he does: Feargal is an associate in the Financial Institutions Group at Skadden where he advises on a wide range of insurance-related transactions, as well as regulatory issues in the insurance sector.

Organization: Skadden

Words of wisdom: “For group supervision purposes and group solvency purposes, only Switzerland, Bermuda and the member states of the European Union are deemed equivalent to the U.K. However, it is important to note that no reciprocal determinations have been made by the European Union, which means that member states of the European Union cannot rely on group supervision exercised by the PRA in respect of European Union Solvency II groups that have an ultimate U.K. parent company.”

Connect: LinkedIn

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

In this episode of “The Standard Formula” podcast, which focuses on Solvency II developments, Skadden partner Rob Chaplin is joined by colleague Olivier Peeters to discuss the U.K.'s change in control regime for insurers and insurance brokers.

Rob and Olivier delve into the concept of a “controller” as defined in the U.K. Financial Services and Markets Act 2000 and the obligations that the U.K. regime imposes on controllers looking to acquire a regulated firm.

More specifically, they discuss the controller application process required for regulatory approval before closing a transaction, the assessment of applications to determine whether the incoming controllers are fit to control the business of a regulated firm and the obligations of controllers. They also discuss a recently released consultation paper by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) proposing that the existing European Union guidelines on changing control approvals be replaced by U.K.-specific rules and guidance.

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures, and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

Name: Olivier Peeters

What he does: Olivier is an associate in the Financial Institutions Group at Skadden, where he advises insurers, brokers and private equity sponsors on mergers and acquisitions, disposals, investments, reorganizations, alternative transaction structures, multijurisdictional disputes and regulatory matters.

Organization: Skadden

Words of wisdom: “Usually, when a buyer enters into an agreement to acquire a target, it is free to complete the acquisition at a time that the parties agree. But when you're buying an insurance company, or an insurance broker in the U.K., you will always need regulatory approval to complete the acquisition.”

Connect: LinkedIn

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.

This episode of “The Standard Formula” podcast is part three of the “Back to Basics” series, which takes a deep dive into the Solvency II regime. Skadden partner Rob Chaplin is joined by his colleague Meher Pahuja to discuss third-country branches and the cross-border provision of services.

Rob and Meher explore the significance of third-country branches and the cross-border provision of services, shedding light on the regulatory landscape before and after Brexit. They emphasize the importance of these topics, discussing “passporting” and pre-Brexit regulations. They also provide insights into the post-Brexit environment, explaining the Temporary Permissions Regime (TPR) and the Financial Services Contracts Regime (FSCR) in the U.K., in addition to briefly covering the contingency arrangements implemented by the EU.

Later in the episode, Rob and Meher analyze the Prudential Regulation Authority’s (PRA's) proposals to remove capital requirements for third-country branches, and highlight the PRA's efforts to encourage competition and protect customers in the U.K. insurance market.

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

Name: Meher Pahuja

What she does: Meher is a London-based trainee solicitor at Skadden, focusing on financial institutions.

Organization: Skadden

Words of wisdom: “What is clear from all these consultation papers is that the PRA is taking significant strides to encourage competitiveness and growth in the U.K. market while protecting customers.”

Connect: LinkedIn

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.