With Solvency II, life insurers are finding the asset-liability matching requirements for unit-linked portfolios to be more important. The Solvency II regulation has created an opportunity for life insurers to enhance the capital position of unit-linked portfolios while simultaneously stabilising balance sheets. But these benefits come at a price. Insurers will have to determine whether the capital savings are enough to offset the operational complexities and a more volatile solvency coverage ratio.
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Unit-linked matching considerations under Solvency II
With the introduction of Solvency II next year, insurers are focusing on capital management and strategic implications surrounding the programme.