Table of Contents
What is fungibility capital?
“fungibility of capital means that an asset of the group is readily available for meeting any commitment of the. group, regardless of the entity within which asset is held or commitment arises.
What is own funds in Solvency II?
Own funds consist of basic own funds and ancillary own funds. Pursuant to Article 88 of the Solvency II Directive ( EU Directive 2009/138/EC), basic own funds are composed of the excess of assets over liabilities and subordinated liabilities.
What does fungible mean in insurance?
Fungibility is the ability of a good or asset to be readily interchanged for another of like kind.
What makes an asset fungible?
Fungible assets means any assets, other than money, that are interchangeable for commercial purposes and the properties of which are essentially identical.
What are own funds?
Broadly speaking, in bank funding and capital management, ‘own funds’ means the bank’s own capital. Own funds are a very stable source of funding, because there is either no contractual obligation to repay them, or only a limited obligation. Other sources of the bank’s funding are ‘borrowed’ funds.
What are the three pillars of solvency 2?
Three areas of investigation, size and composition, board self-assessment processes and board remuneration policies, are covered by the survey. The results show a satisfactory level of compliance of the boards with respect to the requirements established by Solvency II.
What is a good SCR ratio?
Since the introduction of Solvency II, insurance companies are required to hold eligible own funds at least equal to their SCR at all times in order to avoid supervisory intervention, i.e. the SCR coverage ratio, defined as eligible own funds divided by SCR, is required to be at least 100%.
What is the difference between fungible and non-fungible?
Fungibility is the ability of a good or asset to be readily interchanged for another of like kind. Like goods and assets that are not interchangeable, such as owned cars and houses, are non-fungible.
What makes something fungible?
Fungible goods are items that are interchangeable because they are identical to each other for practical purposes. Commodities, common shares, options, and dollar bills are examples of fungible goods.
What is an example of something that is fungible?
Commodities, common shares, options, and dollar bills are examples of fungible goods. Assets like diamonds, land, or baseball cards are not fungible because each unit has unique qualities that add or subtract value.
What means own funds?
What is eligible own funds?
What are Eligible Own Funds? Eligible Own Funds is the component of actual Own Funds which are eligible to qualify for the coverage of the SCR and MCR. The eligibility is decided by the regulator, which includes restrictions on the amount of each Tier of capital an insurance company can use to cover their SCR and MCR.
What are own funds in insurance?
An insurer’s Own Funds are the measurement of how much available capital an insurer has on the balance sheet to cover its SCR and MCR requirements. Own Funds can be split into two categories: 1. Basic Own Funds which are readily available within the insurance company.
What is Solvency II for insurance companies?
Solvency II Solvency II is the prudential regime for insurance and reinsurance undertakings in the EU Solvency II sets out requirements applicable to insurance and reinsurance companies in the EU with the aim to ensure the adequate protection of policyholders and beneficiaries.
How does inbound reinsurance affect Solvency II?
Solvency II Basis Local Statutory Basis Increase in SCR from inbound reinsurance Increase in regulatory capital from inbound reinsurance •Inbound reinsurance has a bigger impact on SII surplus than the local surplus basis,
What is fungibility in finance?
Key Takeaways Fungibility is the ability of a good or asset to be interchanged for another good or asset of like kind. Like goods and assets that are not interchangeable, such as owned cars and houses, are non-fungible.
What are transferability restrictions in Solvency II?
Life Conference 2012 Solvency II Transferability of Capital 6 November 2012 Transferability restrictions limit the available own funds at the Group 1 © 2012 The Actuarial Profession www.actuaries.org.uk • Transferability is the ability to make available the own funds of an insurance undertaking to cover the