Comparing Prudential Solvency Regulatory Regimes

In its simplest form, a prudential solvency regime is designed to ensure insurance policyholders are compensated while allowing insurers to remain competitive and not unnecessarily over-capitalized. The three most significant prudential solvency regulatory regimes globally are Solvency II in the EU and U.K., U.S. risk-based capital (RBC) and the Bermuda Solvency Capital Requirement (BSCR).

There are commonalities among the regimes, and they all reflect three main elements: companies need to be conservative in their estimate of liabilities; calculations need to force insurers to invest in assets with an appropriate liquidity and risk profile; and companies must finance an excess of such assets with sufficient capital. Applying each of the requirements alongside real-world complexities often presents a challenge to insurers when looking at each company’s individual business practices.

New York-based Skadden partner Patrick Lewis and Neil Horner of ASW Law in Bermuda join host Robert Chaplin to review and compare the various regimes.

🗝️ Key Points 🗝️

Top takeaways from this episode

★ Understanding Solvency II

★ Regulation in the U.S.

★ Credit ratings are particularly important for Bermuda insurance industry

💡 Meet Your Host 💡

Name: Robert Chaplin

Title: Partner at Skadden

Specialty: Robert advises on mergers and acquisitions, disposals, joint ventures and regulatory matters, particularly with U.K. and EU Solvency II. He primarily focuses on transactional and advisory work in the insurance sector.

Connect: LinkedIn

💡 Featured Guest 💡

Name: Patrick J. Lewis

What he does: Patrick represents acquirers, sellers, targets and financial advisors in a wide variety of transactions, including public and private mergers, acquisitions, dispositions (including auctions), joint ventures, reinsurance, shareholder activism, capital raising transactions and other corporate matters. In recognition of his work, he was named a Rising Star by The Legal 500 US and IFLR1000. Patrick also has received a Burton Award for distinguished legal writing, one of the highest literary honors in law.

Organization: Skadden

Connect: LinkedIn

💡 Featured Guest 💡

Name: Neil Horner

What he does: Neil joined ASW Law in 2003, prior to which he worked for leading law firms in London, New York and Frankfurt. He is a qualified lawyer in Bermuda, England and New York, with extensive experience working on large commercial, financing, corporate finance and corporate insurance transactions.

Organization: ASW Law

Connect: LinkedIn

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The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.