Calculating the capital requirement for currency risk for currencies pegged to the euro

 

SUMMARY OF:

Regulation (EU) 2015/2017 — technical standards with regard to the adjusted factors to calculate the capital requirement for currency risk for currencies pegged to the euro in accordance with the Solvency 2 Directive

WHAT IS THE AIM OF THE REGULATION?

It sets out the capital requirements for currencies pegged to the euro.

KEY POINTS

Directive 2009/138/EC, known as the Solvency 2 Directive, requires insurance companies to have enough own funds to withstand significant financial difficulties by meeting certain capital requirements.

Commission Delegated Regulation (EU) 2015/35 spells out these requirements in greater detail. In particular, insurance companies must have sufficient funds to cover any loss they may experience from either a 25% increase or decrease in the value of a foreign currency against the local currency.

This regulation, Commission Implementing Regulation (EU) 2015/2017:

• replaces the 25% factor by lower percentages, ranging from 0.39% to 4.27%;
• contains the adjusted factors for currency risk where the local or foreign currency is the euro, or is pegged to the euro;
• applies to the Danish krone, the Bulgarian lev, the West African and Central African CFA francs and the Comorian franc.

FROM WHEN DOES THE REGULATION APPLY?

It applies from 2 December 2015.

BACKGROUND

The European Insurance and Occupational Pensions Authority (EIOPA) supports coordination between national authorities and contributes to ensuring the consistent application of EU laws for the insurance and occupational pension sectors in EU countries.

EIOPA consulted widely on the technical standards contained in the regulation, analysing the potential related costs and benefits and presented its proposal to the European Commission for adoption.

For more information, see:

• Risk management and supervision of insurance companies (Solvency 2) (European Commission)
• Solvency II (European Insurance and Occupational Pensions Authority).

MAIN DOCUMENT

Commission Implementing Regulation (EU) 2015/2017 of 11 November 2015 laying down implementing technical standards with regard to the adjusted factors to calculate the capital requirement for currency risk for currencies pegged to the euro in accordance with Directive 2009/138/EC of the European Parliament and of the Council (OJ L 295, 12.11.2015, pp. 21-22)

RELATED DOCUMENTS

Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 12, 17.1.2015, pp. 1-797)

Successive amendments to Regulation (EU) 2015/35 have been incorporated into the basic text. This consolidated version is of documentary value only.

Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, pp. 48-83)

See consolidated version.

Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (recast) (OJ L 335, 17.12.2009, pp. 1-155)

See consolidated version.

last update 09.02.2018