Q&A on Solvency II Treatment of National Mortgage Guarantee

Q&A

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Question:

Under the current Solvency II regime, is an insurance company permitted to take the national mortgage guarantee (Nationale Hypotheek Garantie – NHG) into account in determining the solvency capital requirement (SCR) for mortgage loans using the Standard Formula (SF)?

Published: 19 November 2019

Answer:

No, a mortgage loan including NHG does not lead to a lower SCR compared to a similar mortgage loan excluding NHG. The amendments made in 2019 to article 192(4) of the Solvency II Delegated Regulation did indeed broaden the possibilities to recognize guarantees in relation to mortgage loans, however the NHG does not comply with all the relevant Solvency II requirements on guarantees in relation to mortgage loans. Article 215(d) of the Solvency II Delegated Regulation for instance requires that an insurance company does not first have to pursue the obligor before obtaining a payment by the guarantor. However, the NHG requires an insurance company to first pursue the obligor before the guaranteed amount is paid out.

Downloads

Gedelegeerde Verordening (EU) 2015/35 (Refers to an external site)

Base law

Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (Refers to an external site)

Commission Delegated Regulation (EU) 2019/981 of 8 March 2019 amending Delegated Regulation (EU) 2015/35 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (Refers to an external site)

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