Solvency II regulatory reporting bold) Subtitle for event – (Arial 28pt) Giles Fairhead Head of Department, Retail Life Date (Arial 16pt) Life Insurance Division Agenda 1. Solvency II reporting and submissions timetable 2. The PRA’s expectations in the preparatory phase 3. The PRA’s data collection system, firm testing and on-boarding plan 4. Asset data reporting expectations 5. Current ‘hot topics’ from industry engagement 2 Reporting and disclosure is integral to Solvency II Three-pillar approach Pillar 1 Quantitative requirements • Own Funds (including balance sheet) • Minimum capital requirement (MCR) • Solvency Capital Requirement (SCR) Pillar 2 Qualitative requirements and supervisory review • Governance, risk management and required functions 2 • Own Pillar risk and solvency assessment Pillar 3 Reporting, disclosure and market discipline • Supervisory Process • Disclosure • Transparency • Support of risk-based Pillar 3 supervision through market mechanisms • Market-consistent valuation of balance sheet • Risk Based requirements • Business governance • Risk-based supervision • Disclosure • Transparent markets 3 The Solvency II reporting requirements include qualitative and quantitative reports • • The Solvency II regime will place new reporting requirements on firms covering both quantitative and qualitative aspects The Solvency and Financial Condition Report (SFCR) and the Report to Supervisors (RSR) contain both qualitative and quantitative reports Quantitative reporting templates Sections covered • • • • • • • • • Balance Sheet Premium claims and expenses Own funds Variation analysis SCR and MCR Assets Technical provisions Reinsurance Group reporting Narrative reports • • • • • Business and performance System of governance Risk profile Valuation for solvency purposes Capital management 4 Pillar 3 will require firms and groups to make certain reports and templates publically available • • • The Pillar 3 reporting requirements under Solvency II focus on two main reports, the Solvency and Financial Condition Report (SFCR) and the Regular Supervision Report (RSR) A limited number of quantitative templates and qualitative data are required to be made publically available in the SFCR All quantitative templates and a detailed set of qualitative data is required to be reported privately to the regulator in the RSR Audience Public Private Narrative Reports Type Qualitative Qualitative Frequency Annual • Annual summary • In full every 3 years Quantitative Reporting Templates Type Quantitative Quantitative Frequency Annual Annual & Quarterly National Specific Templates Frequency N/A Annually Major developments affecting relevance of SFCR will require an updated SFCR PRA ad-hoc reporting will continue Other 5 Solvency II reporting policy timetable 2014 2016 1 January 2016 SII Implementation 31 March 2015 SII Transposition SII Directive Guidelines 2015 Jun – Sep 2014 Guidelines 1 Public Consultation February 2015 Guidelines 1 Publication July 2015 Guidelines 2 Publication Dec 2014 – Mar 2015 Guidelines 2 Public Consultation Implementing Technical Standards Taxonomy October 2014 ITS 1 Publication Dec 2014 –Mar 2015 ITS 2 Public Consultation July 2014 Final taxonomy for preparatory phase December 2014 Draft SII taxonomy June 2015 ITS 2 Publication July 2015 Final SII taxonomy April 2015 Candidate Final SII taxonomy 6 The PRA is seeking industry feedback on a range of topics The PRA will continue to publish consultation papers on Solvency II to gain industry feedback. Supervisory statements will be published ahead of transposition at 31 March 2015 • • • The PRA proposed 11 NST templates issued as part of CP16/14. Remaining NST templates are expected to be issued for consultation before the end of the year. The PRA expects to issue further information, as required, on materiality levels, exemptions and the application of proportionality later this year or early 2015. Number Template Name NS.01 With-profits value of bonus NS.02 With-profits assets and liabilities NS.03 Pools NS.04 Assessable mutuals NS.05 Revenue account (Life) NS.06 Business model analysis (Life) NS.07 Business model analysis (Non-Life) NS.08 Business model analysis – financial guarantee insurers NS.09 Best-estimate assumptions for life insurance risks NS.10 Projection of future cash flows (bestestimate – non-life: sub-classes) NS.11 Non-life insurance claims information (general liability sub-classes) 7 Current timetable for submission of returns for firms and groups with 31 December year end Firms with non-December year end should speak to supervisors for their submission timetable 2015 2016 March 2016 Last Solvency I submission Solvency I Submissions Solvency II Submissions Solos Groups 2017 Preparatory phase returns Day 1 returns Cat 1-3 firms only All directive firms and groups SII returns 1 Jul 25 Nov 20 May 26 May 25 Aug 25 Nov 25 Feb 19 May Annual Qrtly One off Q1 Q2 Q3 Q4 Annual + NST 15 Jul 6 Jan 2016 20 May 7 Jul 6 Oct 6 Jan 7 Apr 30 Jun Annual Qrtly One off Q1 Q2 Q3 Q4 Annual NB: Details dependent on final text. NB: Please be aware that the date of Day 1 returns was changed to 20 May 2016 for both solos and groups in the Delegated Act. This change was made on the table above after the PRA Solvency II Conference on 17 October 2014 . 8 The PRA’s expectations of firms participating in the preparatory phase Expectations of firms were set in December 2013 when the PRA published Supervisory Statement 4/13 on applying EIOPA’s preparatory guidelines Category 1-3 firms and groups required to report. All firms and groups in scope of preparatory reporting should have been notified in January 2014 A significant increase in the extent and depth of insurance data shared between firms and the PRA The preparatory phase should be used by firms to prepare for Solvency II implementation and returns should be of a high standard and quality Firms and groups will need to be on-boarded onto the BoE PRA Data Collection system in Q1/2 2015. Training will also be made available All quantitative firm returns are expected to be in XBRL format with qualitative returns in PDF NSTs not expected for interim reporting 9 Firms will submit returns via a new reporting system • The PRA will use a new system to support data collection and XBRL processing, which firms will be able to access via a web portal • All returns must be provided in the following formats: • • • QRTs – in XBRL Qualitative returns – in PDF NSTs – in Excel (initially, may move to XBRL in the future) Firm submits QRTs NSTs Qualitative returns • Feedback provided to firms on validation and plausibility • Re-submissions may be required or further explanation requested Collections system Secure Web Portal XBRL processor Validation Plausibility EIOPA PRA Supervision 10 The PRA will be conducting industry testing and onboarding firms throughout 2015 2014 2016 2015 Q4 Q1 PRA XBRL testing Q2 Q3 Q4 Industry testing (Cat 1-3) Industry testing (all other firms) On-boarding (Cat 1-3) On-boarding (all other firms) Q1 • The PRA intends to implement and start testing the data collection system and the XBRL processor in Q4 2014 • Data collection system testing with firms is planned in two stages; 1. Industry testing for Cat 1-3 firms – Cat 1-3 firms will be expected to test the PRA external web portal prior to June 2015 including logging in, setting up their return and submitting test data 2. Industry testing for non Cat 1-3 firms – from Q3 2015 all other firms will be provided the opportunity to also test the Portal, to trial logging in, setting up returns and uploading files • Firms will be expected to on-board, with those participating in the preparatory phase prioritised 11 Solvency II reporting increases the amount of detailed information reported Solvency II returns will require the submission of detailed asset data for the first time. As a result, the volume of data submitted is expected to significantly increase. This will include line by line asset data which must include a range of detailed information about the asset including items such as NACE codes and geography. Given this increase in granularity the PRA expects firms to need to have: • • Early engagement with the organisations who manage their assets to prepare for the requirements that will be placed upon them as a result of the asset data submissions Early engagement with other stakeholders (e.g. IT providers, information providers) The PRA would expect cat 1-3 firms to be well advanced in this regard as some of this granular information will be required in the preparatory reporting. 12 Current ‘hot topics’ from the industry engagement • The PRA Solvency II regulatory reporting industry working group acts as a forum for the PRA and industry representatives to discuss technical and practical implementation challenges. • Three key areas where firms are seeking further clarity have been highlighted. Asset Look through Audit and assurance of regulatory returns Materiality threshold 13 Addressing firm questions If firms have questions regarding Solvency II regulatory reporting requirements and interpretation, they should : 1. Check the published PRA Q&As on the BoE PRA website http://www.bankofengland.co.uk/pra/Pages/solvency2/preparing.aspx 2. Submit questions to EIOPA’s question and answer process if the questions have not already been answered https://eiopa.europa.eu/publications/eiopa-guidelines/qa-onguidelines/index.html 3. Help the PRA track questions submitted to EIOPA by notifying [email protected] The PRA will continue to publish answers to questions received from firms in the run up to implementation 14 Key messages – regulatory reporting • The PRA is building a new data collection system and will be ready to receive the submission of information in the preparatory phase from June 2015 • The PRA is consulting on NSTs in CP16/14, final templates will be published in a policy statement ahead of transposition. Further consultation papers will be published on reporting including Lloyd’s NST and firm exemptions from Solvency II reporting • Reporting policy is increasingly stable, there are some outstanding issues that the PRA is aware of through its work with the regulatory reporting industry working group • Testing of the new system is expected to start in Q1 2015 and will be phased in the run up to implementation. Firms will be expected to on-board to the system from Q2 2015. Cat 1-3 firms participating in the preparatory phase will be prioritised for both testing and on-boarding Next steps for firms Firms with a 31 December year end should be aware of when they will be involved in PRA testing, on-boarding and when they need to submit their first returns Cat 1-3 firms All other firms • • Starting Q3 2015 • February 2015 for selected subset of firms. (participating firms have already been notified) Q2 2015 for all other Cat 1-3 firms On-boarding • Starting Q1 2015 • Starting Q4 2015 First preparatory phase returns • Solos - 1 July 2015 , Annual submission Groups - 15 July 2015, Annual submission • No reports due during preparatory phase First Solvency II returns due • Solos – 20 May 2016, Day 1 submission Groups – 20 May 2016, Day 1 submission • Solos – 20 May 2016 , Day 1 submission Groups – 20 May 2016, Day 1 submission Testing • • • NB: Please be aware that the date of Day 1 returns was changed to 20 May 2016 for both solos and groups in the Delegated Act. This change was made 16 on the table above after the PRA Solvency II Conference on 17 October 2014 .