Using an Internal Model to Calculate Solvency Capital Requirements

“Insurers are expected to hold eligible owned funds in excess of the Solvency Capital Requirement. There are two main methods of calculating the SCR under Solvency II, the standard formula and internal model methods.”

In this episode of “The Standard Formula” podcast, Rob Chaplin, host and head of Skadden’s Europe Financial Institutions Group is joined by colleague George Belcher to discuss Solvency II’s internal models (IM). Despite a higher cost of development, IMs offer numerous benefits, such as more accurate risk sensitivity, more flexibility and more available data. Rob and George also explore partial IMs, changes to existing models, the PRA approval process and implications of the U.K.'s move away from EU Solvency II standards.

💡 Meet Your Host 💡

Name: Robert Chaplin

Title: Partner, Insurance at Skadden

Specialty: Rob is the head of Skadden’s Financial Institutions Group in Europe. He primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.

Connect: LinkedIn

💡 Featured Guest 💡

Name: George Belcher

What he does: George is European Counsel in the Financial Institutions and Insurance Groups at Skadden. He focuses on insurance-related public and private acquisitions and private equity investments, as well as regulatory issues in the insurance sector. He also frequently advises on matters related to Lloyd’s of London.

Organization: Skadden

Words of wisdom: “A firm may choose a partial IM where a particular aspect of its business does not fit well within the standard formula.”

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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.