Moody’s Investors Service said a “likely further delay” of a new risk-based regulatory regime for European insurers such as Allianz SE (ALV) and Axa SA (CS) will have “broadly negative” implications.
A later start of Solvency II, which has already been postponed to 2014 and may now be further delayed until 2016, would defer a “stronger, credit-enhancing regulatory regime” the ratings company said in a report today. It would also allow insurers to “incur more risk than regulators would allow under the new regime” and favour companies that are less advanced with the rules’ implementation, it said.
While the European Commission had planned to start introducing Solvency II from next year, delays in getting approval from the European Parliament have led to discussions about further postponements. EU lawmakers rescheduled a plenary vote on the so-called Omnibus II Directive needed to agree on the final criteria for calculating capital requirements under the new regime from Nov. 20 to March 11 next year.
The EU’s top insurance regulator, the Frankfurt-based European Insurance and Occupational Pensions Authority, or Eiopa, may “ask insurers to participate in an evaluation exercise, the Long Term Guarantee Assessment, and we believe this assessment to be a likely contributor to the push-back of the Omnibus II vote and the project overall,” Moody’s said.
Gabriel Bernardino, chairman of Eiopa, told the Wall Street Journal in an interview on Oct. 17 that “under the best scenario, Solvency II could start to be implemented either 2015 or 2016.” His comments were echoed by Carlos Montalvo, Eiopa’s executive director, in Baden-Baden, Germany, earlier this week.
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