SNR: Solvency ratios in life and non-life insurance sector at around 170% at 2016 year-end

Statistical news
Datum 8 september 2017

The first official annual statements under Solvency II have revealed that the weighted average of solvency ratios in the Dutch insurance sector is above the legal standard of 100%.

Based on the new supervisory framework, the solvency ratios of the life and non-life sectors came out around 170%. 

Chart 1 Solvency ratios by sector, 2016 year-end

Chart 1 Solvency ratios by sector, 2016 year-end

The distribution in the middle segment in the life insurance sector is more pronounced than that in the non-life sector.  The middle segment includes 50% of insurance firms, the second and third quartiles. This means that 50% of life insurance firms has solvency ratios of between 143% and 261%. The sector average is at the lower end of the middle segment, meaning that there are larger insurance firms in the lower half of the distribution.   

Solvency ratios are computed by dividing eligible own funds by the solvency capital requirement (SCR), whereby Solvency II imposes risk-based capital requirements. The life insurance sector has a SCR of EUR 19.3 billion, and eligible own funds of EUR 32.5 billion.  The non-life sector has a SCR of EUR 5.4 billion and eligible own funds of EUR 9.0 billion.

Solvency ratios under Solvency II, 2016 year-end (in EUR million)

 

  Life    Non-life (exc. health)
SCR    19,311    5,361
Eligible own funds    32,518    8,955
Solvency ratio    168%    167%

 

The quality of the own funds is generally high (see Chart 2). It largely consists of Tier 1 capital: 83% in life, and 97% in non-life. This is the highest grade of capital available, e.g. paid-up share capital.

Chart 2 Own funds according to Tier classes, 2016-year end (EUR million)

Chart 2 -Own funds according to Tier classes, 2016-year end (EUR million)

De Nederlandsche Bank publishes new tables based on the first full annual statements under Solvency II on its website. In addition to aggregate data at sector level, the tables also include figures at individual level (by insurance firm).

More information