Regulatory Alerts2022-05-17
Insurance solvency standards: the quality of capital and regulatory treatment of financial reinsurance
The Reserve Bank of New Zealand proposes revised solvency standards to define the quality of regulatory capital and clarify the treatment of financial reinsurance for licensed insurers. The consultation outlines strict qualifying criteria for capital instruments, emphasizing that capital must be permanent, freely available to absorb losses, and subordinate to policyholder claims. These changes aim to ensure that only high-quality capital instruments contribute to an insurer's solvency margin, thereby promoting sector stability and protecting policyholders.
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