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Capital management policy


In the first half of 2016, De Nederlandsche Bank (DNB) has conducted a sector-wide theme investigation on capital management policies at insurers. Based on this investigation, DNB has formulated a number of principles which DNB expects insurers to consider when drafting their capital management policies.

Published: 30 September 2016

Theme investigation

The thematic examination into capital management policies involved desk research of institution-specific information, which allowed DNB to formulate its expectations regarding capital management policies in the Solvency II framework as specifically as possible. The expectations are based on the principles described in this letter together with the additional principals for relevant subsectors.


The principles and expectations reflect DNB’s expectations regarding the capital management policies. DNB will take the principles and expectations into account in the assessment of the capital management policies in insurers' supervisory reports. It is up to insurers themselves how to integrate the principles and expectations in this letter in their capital management policies. DNB has discussed the content of this letter and its annexes with the Dutch Association of Insurers.

Principles for capital management policy

When assessing the capital management policy, DNB applies the following five general principles:

  • The policy is aimed at preventing frequent breaches of statutory solvency requirements;
  • The policy takes into account the composition of own funds and planning of future composition of capital (equity and debt);
  • Insurers ensure in their capital management policy that they are able to take quick and adequate measures in the event that their solvency ratio declines rapidly or falls below a critical limit;
  • Insurers periodically evaluate their capital management policy and adjust it when this is deemed necessary.
  • Insurers also monitor their solvency ratio with a high frequency so they are able to identify its actual and expected developments in time.

In addition to these general principles, the following three principles also apply for the relevant subsectors:

  • Insurers with long-term liabilities (with a maturity of 20 years or more) take economic base laws explicitly into account in their policy, addressing at least the impact of the extrapolation of the interest rate term structure and long-term guarantee (LTG) measures on the current and future solvency ratio;
  • Health insurers integrate their policy on setting premiums into their capital management policy;
  • The policies of the different insurers comprising a group and the policy of that group as a whole are consistent with each other.

The attachment includes a more detailed description of these principles and expectations regarding the capital management policies.

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