What is Tier 1 capital in Solvency II?

What are Tier 1 items? Tier 1 ‘own funds’ include ordinary share capital, non-cumulative preference shares and relevant sub-ordinated liabilities. All distributions on tier 1 items must be cancelled in the event of a breach of the SCR and repayment of principal must be suspended.

What are Solvency II own funds?

Own funds consist of basic own funds and ancillary own funds. Pursuant to Article 88 of the Solvency II Directive ( EU Directive 2009/138/EC), basic own funds are composed of the excess of assets over liabilities and subordinated liabilities. Undertakings must apply for supervisory approval of ancillary own funds.

What is the Solvency II reconciliation Reserve?

The reconciliation reserve is a sum of retained earnings, net income for the financial year and other reserves deducted by foreseeable dividends and other distributions adjusted by Solvency II valuation differences, net deferred tax assets, own shares held directly and Topdanmark’s minority interest.

What is RT1 capital?

RT1 instruments are junior subordinated debt securities issued by insurers that can qualify as capital under current European insurance regulation (Solvency II). Table 1 summarises the main features of the instruments and compares them to other capital securities in the financial sector.

What is the purpose of Solvency II?

Solvency II is a Directive in European Union law that codifies and harmonises the EU insurance regulation. Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency.

What is a Tier 1 insurance company?

Tier 1 usually includes a select network of providers that have agreed to provide services at a lower cost for you and your covered family members. Tier 2 provides you the option to choose a provider from the larger network of contracted PPO providers, but you may pay more out-of-pocket costs.