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Solvency II Symposium Brussels 8 March 2007 Markku Paakkanen Tapiola Group

Solvency II Symposium Brussels 8 March 2007 Markku Paakkanen Tapiola Group. Markku Paakkanen 8.3.2007. Markku Paakkanen 8.3.2007. Markku Paakkanen 8.3.2007. TARGETS FOR SOLVENCY II - EU Commission, markt/2095/99 Establish a solvency margin that is better matched to the true risks

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Solvency II Symposium Brussels 8 March 2007 Markku Paakkanen Tapiola Group

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  1. Solvency II Symposium Brussels 8 March 2007 Markku Paakkanen Tapiola Group

  2. Markku Paakkanen 8.3.2007

  3. Markku Paakkanen 8.3.2007

  4. Markku Paakkanen 8.3.2007 • TARGETS FOR SOLVENCY II - EU Commission, markt/2095/99 • Establish a solvency margin that is better matched to the true risks • Establish principles and not be excessively prescriptive • Provide comparability, transparency and coherency thus creating a level playing field

  5. Markku Paakkanen 8.3.2007 • TARGETS FOR SOLVENCY II - EU Commission, markt/2095/99 • Avoid undue complexity • Avoid unnecessary capital costs • Where possible, be based on common accounting policies • Protect policyholders

  6. Markku Paakkanen 8.3.2007 • TAPIOLA’S EXPECTATIONS ON THE SOLVENCY II PROJECT • Better business practices • Cornerstone in the strategy of the mutual Tapiola Group: • ‘RESPONSIBILITY FOR THE CLIENTS’ • Tapiola expects that improving solvency practices will • Make the use of (customer owned) capital more efficient and more transparent • Push Tapiola Group towards better and more efficient customer service • Benefit the policyholders because of increased and more transparent competition

  7. Markku Paakkanen 8.3.2007 • TAPIOLA’S EXPECTATIONS ON THE SOLVENCY II PROJECT • Remarkable business advantages • As a result of Solvency II project progress is to be expected • The group’s overall risk management culture in terms of governance, reporting, documentation and information • Risk selection in underwriting • Pricing of products and product design

  8. Markku Paakkanen 8.3.2007 • TAPIOLA’S EXPECTATIONS ON THE SOLVENCY II PROJECT • Remarkable business advantages • As a result of Solvency II project progress is to be expected • Use of DFA/internal business models helps in • Strategic target setting • Operative business planning • Optimization of the use of capital • Optimization of reinsurance structures • Investment policy • Level of customer benefits

  9. Markku Paakkanen 8.3.2007 • TAPIOLA’S EXPECTATIONS ON THE SOLVENCY II PROJECT • Building on present strengths • Tapiola has developed a non-life model based on the Finnish Solvency model (factor based regulatory capital model taking into account underwriting and capital risk) • This model is used to set targets for • Growth • Solvency level • Profitability (company and LOB levels)

  10. Markku Paakkanen 8.3.2007 TAPIOLA’S EXPECTATIONS ON THE SOLVENCY II PROJECT Building on present strengths A pre-study of internal capital models focusing on the modelling capabilities, human resources, data availability The study resulted in options/timetables for further steps towards more sophisticated solvency models Challenges are big, but potential business advantages are bigger and there is a possibility for quick wins.

  11. Markku Paakkanen 8.3.2007 • CONCLUSIONS • Tapiola sees Solvency II • More as an opportunity than as a threat • More with an offensive than defensive approach • As a way to promote customer benefits because of increased • Policyholder protection (risk based solvency framework) • Transparency • Efficiency in capital management • Risk based pricing

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