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Solvency II EV - Annuities

F

FloWesh

Member
I remember reading somewhere that complanies writing significant annuity business might find more need to continue publishing EV after move to Solvency II.
Why is that so?
 
Could it be because if a business is writing significant annuity business, there is a good chance that it's carrying out a matching adjustment in the calculation of its BEL for Solvency II?

The requirements for using a matching adjustment are quite stringent in terms of the type of products that the company must have. I think one of the requirements is that the company must write significant annuity business.

If a matching adjustment is being carried out when calculating BEL for Solvency II, there is a chance the adjustment is not being made for calculating EV. This would result in the EV being different to the Solvency II surplus. Hence separate calculations are needed.
 
I think this is due to over-engineered and restrictive matching adjustment.

Secondly, the risk margin method has also undervalue annuities business (high COC, low risk environment)
 
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