The European Insurance CFO Forum (the CFO Forum) announces press release on QIS

Amsterdam, 23 August 2010

The European Insurance CFO Forum (CFO Forum) welcomes the European Commission’s recently issued fifth quantitative impact study (QIS 5) which will facilitate an assessment of the current state of Solvency II. The CFO Forum believes that broad participation in the study is necessary to ensure that a clear picture will be developed of the appropriateness and feasibility of the solutions and options set out in the QIS5 proposals by the Commission and whether they would allow the finalisation of the implementing measures of Solvency II.

READ MORE...

ENTER HERE...

This site uses Adobe Acrobat Reader™. Click here to download a free version from Adobe Systems™. For help on Adobe Acrobat Reader please click here.

DISCLAIMER

All contents © copyright 2002-2009 Stichting CFO Forum Foundation. All rights reserved

Embedded Value

Embedded Value is a way of reporting the value of the life insurance business companies have with their customers. For some time, this supplementary information varied by country and, in some cases, by company within a country making it difficult for investors to compare relative performance.

Market Consistent Embedded Value
Use of the Market Consistent Embedded Value Principles
European Embedded Value

Market Consistent Embedded Value

In October 2009, the CFO Forum published an amendment to the Market Consistent Embedded Value ('MCEV') Principles© to reflect the inclusion of a liquidity premium. The CFO Forum recognises that the existence of a liquidity premium is clear, as evidenced by a wide range of academic papers and institutions. It also recognises that its inclusion and quantification are equally important for Solvency II. The changes affirm that the reference rate to be applied under MCEV should include both the swap yield curve appropriate to the currency of the cash flows, and on top of it, a liquidity premium, where appropriate. The CFO Forum is performing further work to develop more detailed application guidance to increase consistency going forward.

The CFO Forum originally published Market Consistent Embedded Value ('MCEV') Principles© in June 2008, in order to bring greater consistency and improved disclosure to the European insurance industry's Embedded Value disclosures. Specifically, the MCEV Principles were designed to bring:

• A shareholder's perspective on value, being the present value of future cash flows available to the shareholder, adjusted for the risks of those cash flows.
• A market consistent approach to financial risk.
• A greater focus on disclosing cash emerging from covered business.
• Disclosure of combined Group MCEV information.

Use of the Market Consistent Embedded Value Principles

The European Insurance CFO Forum reserves its right to be identified as the author of the Market Consistent Embedded Value (MCEV) Principles. The copyright and other rights in and to the Principles are the property of the CFO Forum and the Principles may not be amended or modified without the written consent of the Chairman of the CFO Forum. Save as set out here, all such rights are reserved.

Acceptable use of the Principles

The Principles may be applied by insurers wishing to use them, in their entirety, for financial reporting purposes. They may be faithfully reproduced, in whole or in part, without amendment provided that the CFO Forum's copyright notice is included each time.

Referring to the Market Consistent Embedded Value (MCEV) Principles

Where the Principles are used in a publication or reproduced, in whole or in part:

1. The following copyright acknowledgement should be included at the first usage, in the text or a footnote : Copyright© Stichting CFO Forum Foundation 2008; and
2. The Principles should be referred to as follows: the European Insurance CFO Forum Market Consistent Embedded Value Principles. Further references to the Principles should use either their full title, 'the Principles' or the 'MCEV Principles'

The CFO Forum reserves all its rights in respect of any unauthorised use, adaptation or modification of the Principles or where they are inconsistently applied.

European Embedded Value

In May 2004, the CFO Forum published its European Embedded Value ('EEV') Principles, which provided a consistent basis for European insurers to prepare their Embedded Value reports. Along with additional guidance, published by the CFO Forum in October 2005, the principles described how companies should prepare their supplementary embedded value reporting on the performance of their life insurance operations. These principles were adopted by all member companies by 31 December 2005 and were widely used throughout the industry.