On 27 January 2016, EIOPA published an Opinion on the application of a combination of methods to the group solvency calculations.
Solvency II provides that group solvency calculations can be carried out on the basis of a consolidated method, a deduction and aggregation method or a combination of both methods. EIOPA provides guidance and clarification on certain issues in relation to the application of a combination of methods. EIOPA states that when a combination of methods is being used for the calculation of the group solvency, the provisions of Solvency II for each method should be applied respectively. EIOPA also recognises that the use of a combination of methods may lead to unintended consequences if it is used by groups which, for example, organise their funding through a central funding company and gives guidance as to approach to be taken in such a scenario. The combination of methods can be applied if approved by the relevant group supervisor and the Opinion states that group supervisors will need to assess the potential impact of the application of a combination of methods before reaching a decision. EIOPA recognises that the application of a combination of methods may result in the group supervisor allowing specific solutions to avoid unjustified disadvantages. EIOPA recommends that to ensure that prudential concerns are addressed and the specific solutions do not place groups concerned in an advantageous position compared to groups using exclusively the consolidation method, certain conditions as set out in the Opinion should be satisfied.
A link to the Opinion is here.