The equity of insurance companies.

The equity of insurance companies. 

Come insurance companies, in addition to their insurance business, have let their investment subsidiaries speculate on the hyper-market products and equity derivatives to benefit from higher yields. Indeed, like banks, insurance companies manage for their own account, that is to say they use the funds that belong to them to benefit from market opportunities. A few insurers and bancassurers have thus set “ reasonable ” losses in the context of investment strategies through their direct marginal exposure or via “ funds of funds ”, or to subprime s (MATMUT due to the liquidation of several funds investments managed by its alternative management subsidiary ADI, which held securities sold by the Lehman Brothers bank ; BNP Paribas through its exposure to Lehman Brothers, Crédit Agricole, etc.), or to Bernard Madoff companies (BNP Paribas, Axa, Groupama , Crédit Agricole, CNP Assurances ), for unit-linked life insurance contracts potentially exposed to the consequences of the biggest swindle of this century (see below ).      

Insurers' point of view . Under the latter subject, it appears that the French and European insurance would pretty well through the first financial crisis of 2008/2009 (B. Spitz, president of F ederation French of Insurance Companies , Ensure , Letter of FFSA , n ° 1 30, February 5, 2009). This is the reason why the insurers of the old continent mobilized at the beginning of 2011, just before the outbreak of the new financial crisis, to criticize the overly prudential financial constraints foreseen in the context of the implementation. of Solvency II, in particular the new requirements relating to the strengthening of equity capital and solvency margins.

Solvency II. The European Parliament and Council adopted in April and May 2009 the Solvency II directive, which reforms the prudential standards applicable to insurance companies. The provisions of this directive must now be transposed into the laws of the various Member States. As for the entry into force of this Directive, it is normally expected for the 1 ^st January 2013. However, it requires, first, the adoption of various technical measures, such as the method of calculation of the minimum capital required by regulatory authority, Minimum Capital Requirement , and those of the capital required to ensure solvency, Solvency Capital Requirement. These technical measures could be incorporated into a new directive known as Omnibus 2, the adoption of which by the European Parliament is scheduled for the first half of 2012. 

This reform is based on the observation that each insurance company is unique in terms of its risk profile. For this reason, it recommends defining the solvency margin according to the real risks weighing on insurance companies, and no longer according to percentages on premiums and claims. In this case, Solvency II is based on a three-tier architecture : - the Pillar I sets new quantitative standards for technical provisions and own funds of insurance companies ; these standards being adapted according to the nature of the insurance risks inherent in each insurance company (for example, the higher the risk of an insurer, the higher its share capital must be). - the Pillar II defines the terms of prudential supervision in internal risk monitoring for insurance companies (corporate governance, supervisors ...). - the Pillar III includes the information to be provided by insurance companies to the supervisory authorities to improve transparency and market discipline.     

The implementation of this directive has given rise to concern among professional associations of insurance companies, meeting within the European Insurance Committee. Schematically, insurers are concerned about the excessive demands of capital and solvency margins envisaged by the CEIOPS (Committee of European Supervisors, now EIOPA on 1 ^st January 2011), even though they consider going through the 2008 financial crisis / 2009 quite honorably. They therefore plead for moderate prudential standards. For its part, the European Insurance and Occupational Pensions Authority (EIOPA) published in March 2011 the results of the fifth and last quantitative impact study which establishes that insurers are well placed to comply with the new requirements in own funds under Solvency II (QIS5. Online: http://ec.europa.eu/ European Commission → Internal Market → Insurance → Solvency II).For now, the negotiations of the Omnibus 2 led to a development of the original timetable for the implementation of Solvency 2: maintaining the transposition of the Solvency 2 Directive before 1 ^st January 2013 ; but mandatory application of its scheme as of 1 ^st January 2014.