January 2016
Fitch has said that it will not use Solvency II metrics in its ratings.
The long-anticipated Solvency II regime came into effect on 1 January. However, this month Fitch said that Solvency II metrics between insurers were not comparable because of the the different calculation approaches that were being used.
“Many insurers are applying various transitional measures which will strongly affect their metrics: some are using internal models rather than the standard formula and some regulators are taking a tougher stance than others in how they interpret and apply SII,” the agency said.
As well as the lack of consistency in calculation approaches and complexities thrown up by the use of internal models, Fitch said that plans for Solvency II to be reviewed in 2018 meant that important changes were still to come, which added to its reasons for not using the regulation in its ratings. “In the meantime, many insurers will be busy refining their existing internal models or preparing new models for regulatory approval in 2016,” Fitch added.
