I could not understand the application of all points covered here- According to Core Reading, Solvency II impacts 1. capital allocation- how? Is it referring to tier 1/tier 2 cap? 2. risk management- due to ORSA 3. performance management- how? What is performance here? 4. optimal product mix- how? 5. product design- how? 6. optimal asset mix- as assets are shocked, few assets lead to a higher capital requirement than others hence insurer would prefer assets which reduce capital requirement 7. corporate structure- how? 8. merger and acquisition activity- how? 9. management information- due to ORSA and reporting requirement of Solvency II 10. market position via external disclosures Please help in clarifying.
There will be lots of examples of these but a few thoughts to get things going: a group might decide to allocate capital around its business units / subsidiaries in proportion to their individual SCRs performance management might use return on capital as a measure, with 'capital' reflecting the SCR preferred product mix / design can be influenced by how capital intensive a particular product / design is corporate restructurings / transaction activity might be driven by trying to improve diversification between risks, to reduce capital requirements
