News

On 28 June 2010, the international law firm Clifford Chance hosted a seminar in Munich attended by experts from the financial sector which addressed and discussed the implementation of the Solvency II rule book and the considerable changes for which the insurance industry is currently preparing.

The presentations and ensuing discussions focussed on the ramifications of the Solvency II Directive on hybrid capital and insurance-linked securitisation transactions.

The consensus amongst participants was that Solvency II is set to partially alter the features and structuring elements of hybrid capital instruments hitherto established on the market. The grandfathering rules regarding hybrid capital instruments issued at the time of the implementation of the Solvency II rule book was a further point of discussion.

Solvency II is likely to benefit the insurance-linked securitisation market as a result of the harmonised treatment of reinsurance and alternative risk mitigation instruments. However, the market is currently still dominated by securities issued under US law. Furthermore, the discussion focussed on the modified collateral structures of insurance-linked securities, in particular as devised as a result of the financial crisis.

In her introduction lecture, Daniela Weber-Rey (Corporate, Frankfurt) described the major challenges facing the insurance industry in the coming years, particularly with regard to corporate governance.

Dr. Marc Benzler (Banking & Capital Markets, Frankfurt) and Jörg Rhiel (Corporate, Frankfurt) provided an overview of the changes to hybrid capital instruments ensuing from the latest regulatory requirements.

Dr. Thomas Krecek (Corporate, Frankfurt) and Claude Brown (Capital Markets, London) provided an update on the latest developments on insurance linked securities, in particular, in the aftermath of the financial crisis and pointed out what changes the implementation of Solvency II will bring.

A panel discussion chaired by Dr. Arne Klüwer (Banking & Capital Markets, Frankfurt) saw Dr. Thomas Arnoldt (Special and Financial Risks, Munich RE), Dr. Martin Huber (Director, McKinsey & Company, Inc.), Dr. Klaus Miller (Senior Director Structured Insurance Solutions, Commerzbank AG) and Claude Brown, in particular, address whether, and in what form, greater standardisation of transaction documents will boost insurance-linked securitisations in the insurance sector on the German market and attract new investors to this asset class.