On 14 June 2013, EIOPA published its findings on the Long-Term Guarantee Assessment (LTGA), one of the main stumbling blocks in implementing Solvency II. The LTGA tested a set of proposed supervisory measures for long-term guarantee products under volatile and exceptional market conditions (ie the Long-Term Guarantee package).

In response to concerns from national supervisors and participating firms that the LTGA package is overly complex, EIOPA has made a number of recommendations to reduce and simplify the package. EIOPA concluded that the final Long-Term Guarantee package to be included in the Solvency II framework should fulfill a number of principles in order to ensure a high degree of policy protection, as well as an effective supervisory process:

  • Alignment with the Solvency II framework and the economic balance sheet concept;
  • Full consistency and comparability in order to enhance the single market;
  • Efficient linking of all the three pillars (quantitative basis, qualitative requirements and enhanced reporting and disclosure);
  • Proportionality and simplicity;
  • Adequate treatment of transitional issues.

Omnibus II negotiations are now expected to reconvene. Chairman of EIOPA, Gabriel Bernardino, has said that the findings would provide EU political bodies with a reliable basis to make an informed decision on the package and a conclusion on Omnibus II negotiations.

Please click here to view the findings in full.