EU insurers’ solvency ratios weather UFR change
New fixing of ultimate forward rate increases firms’ solvency capital requirements
A cut to the regulator-set ultimate forward rate (UFR) used to discount insurers’ long-term liabilities contributed to the erosion of large life firms’ Solvency II ratios over the first three months of the year, albeit only slightly.
The European Insurance and Occupational Pensions Authority (Eiopa) lowered the UFR to 3.9% from 4.05% at the start of this year. This had the effect of inflating the present value of insurers’ future policyholder obligations, increasing their solvency capital
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