“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.