Regulatory Alerts2022-05-17
Consultation Paper - Insurance Solvency Standards: Guarantees
The Reserve Bank of New Zealand proposes reforms to the solvency treatment of guarantees for licensed insurers to ensure appropriate credit risk mitigation. The consultation replaces a previous 15% capital reduction limit with a higher risk charge, applying the guarantor's risk factor plus a fixed 2% Asset Risk Capital Factor to guaranteed assets. Key adjustments include amending the Limited Term Guarantee formula for demand loans and clarifying legal and maturity definitions for guarantee recognition.
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