August 27th, 2009

Solvency II – Summary of CEIOPS March Consultation Papers: Special Purpose Vehicles

Posted at 1:00 AM ET

Financial Intelligence Team

Special purpose vehicles (SPVs) are used to transfer insurance risks to the capital markets. This document addresses the authorization, regulatory requirements, and scope of supervisory review of SPVs under Solvency II. The requirements refer only to SPVs domiciled in the European Economic Area (EEA); SPVs established outside the EEA are not subject to the rules discussed in this paper.

SPVs will get authorization only to reinsure risks and will be restricted from engaging in other activities. An SPV should be fully funded, which means that its assets are at least equal to the aggregate limit provided. The assets must be available first to meet reinsurance obligations. Thus, investors have a subordinated claim on the SPV’s assets. The reinsurance arrangements with the SPV should effectively transfer insurance risk where the amount of risk transfer will determine the amount of regulatory credit given. Proper documentation, knowledgeable persons running the SPV (”fit and proper requirements”), as well as adequate supervisory reporting (accounting and prudential and statistical information requirements) need to be implemented to protect policyholders and to avoid systemic risk.

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  • Susan Witcraft, Managing Director
  • Frank Achtert, Managing Director
  • Iain Boyer, Managing Director
  • Michelle Harnick, Managing Director
  • Dave Lightfoot, Managing Director
  • Scott Lohman, Managing Director
  • Don Mango, Managing Director
  • Eddy Vanbeneden, Managing Director
  • Jeff Bellmont, Senior Vice President
  • Gina Carlson, Senior Vice President
  • Debbie Griffin, Senior Vice President
  • David Flandro, Senior Vice President
  • Benoît Butel, Vice President
  • Sebastien Portmann, Vice President
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