Regulatory Alerts2024-12-06
Order on Valuation of Assets and Liabilities, Including Insurance Technical Provisions, for Group 1 Insurance Undertakings
The Danish Financial Supervisory Authority and the Ministry of Industry, Business and Financial Affairs issued this order to implement Solvency II requirements for Group 1 insurance undertakings regarding the valuation of assets, liabilities, and insurance technical provisions. The regulation mandates that these valuations reflect market-consistent amounts, specifically requiring the calculation of best estimates as probability-weighted averages of future cash flows plus a risk margin, while prohibiting adjustments for the undertaking's own credit risk. It further establishes strict standards for data quality, the use of risk-free interest curves published by EIOPA, and the segmentation of liabilities into homogeneous risk groups to ensure prudent and objective accounting.