Solvency II

Hi all -

I have been working in a financial reporting role for the past 2 years.

It is a role that I think I am suited to - I enjoy producing and analysing the numbers.
Recently I was asked to be the actuarial resource on the company`s solvency II project. This role will involve ensuring Solvency II deadlines/criteria are met.

I am unsure what to do, the Solvency II role has been presented as an excellent opportunity to get exposure to senior management and gain a deeper understanding of how the company operates -however I`m quite cynical!

Is there anybody else out there involved in Solvency II projects - do you think that the skill set that will be acquired over the next two years will prove beneficial and transferable? I don`t know how this role will exist after the implementation of solvency II

I really don`t know whether to accept the new role or remain involved in financial reporting. Any advice greatly appreciated?

 

Sii

I think its safe to say that people with SII knowledge and experience will be in high demand, especially over the next couple of years, but beyond that too.

So if its something you might enjoy, it could certainly be a good area to have experience in. And even if you don't want to touch SII again, i'd have thought the project type skills you'd develop would be quite transferrable.

If you don't like it, can you just go back and do you current job? If so, what have you got to lose?

 

Thanks for that Matt -

 

Sovency II will almost certainly be scrapped at some point over the next 5-10 years. We are at the start of the biggest debt liquidation that has occurred since the 14th Century. Never in the history of post Reformation capitalism has so much debt needed to be repaid by so many. The falls in the price levels of risky assets in the next few years will not only lead to the renewed failure of the Western World's banking system, but will also lead to large failures of Insurance companies and Pension schemes. Any complex risk based regulatory capital requirements will be replaced by crude and very conservative reserving requirements, which make the system less gameable and less prone to failure. Ironically they will be introduced at a time when another debt liquidation is unlikely to occur for at least another 50-60 years.

 

Cardano, you must be a hit at dinner parties

In principle, the offer sounds like a good one, but I'd agree it seems reasonable to ask questions about the longer term.

My other question is, to what extent will the Solvency II implementation provide you with Solvency II skills as opposed to generic risk-capital policy and control skills? The trouble with having an overly-narrow skill-set is that you become too valuable to promote...

As someone a couple of years away from hitting the jobseeker's market, I suspect Solvency II will be good for me; it seems to be sucking up quite a lot of technical talent, meaning everyone else is having to move up the food chain meaning more vacancies for noobs like me.

 

Calum, I tell it like I see it. Debt didn't suddenly become a problem in 2007, its been a problem for over 20 years. Government and Central bank policy over this long intervening period have simply made things much worse. The policies since 2007 have been little short of disasterous.

 

Those of you in any doubt that we are entering a debt liquidation, should look at the attached graph, showing private debt in USA as a percentage of gdp. It is one of those real "look out below" moments.

 

It could hardly be clearer. But will the balance be restored through default or inflation it certainly ain't gonna be repayment!

 

Repayment in 2010 dollars is certainly out of the question!

One of the most interesting aspects of this graph, is not the current debt liquidation, but the previous one (1930's). The rise in debt to gdp after 1929 from about 160% to 240% was not due to higher nominal debt levels but due to lower gdp. This hasn't happened this time (yet) and we seem to have gone straight to repayment and default.
Inflation only works if it appears in wages. The downward pressure on middle and working class wages from outsourcing, immigration and unemployment (present and pending) is so enormous, that any attempt to drive up inflation through for example QE only results in the rise of consumer prices not wages and so real wages fall and people default on their debts, which is ultimately incredibly deflationary due to the money multiplier - $1 default causes $10 or more of loans to be called in.
Obviously doing nothing will automatically lead to debt deflation via default. The fed is between a rock and a hard place and Bernanke can't create inflation unless he really wants to trash the economy, which he may well do!