Review of policy years June 2016

Circular

Published: 28 June 2016

At its Board meeting in Paris12 May 2016, the Board reviewed the policy years for the Association and decided on release calls for the open years. At the Committee meeting 17 June 2016, the Committee made a recommendation to close the 2013 policy year.

Policy year 2013

The Policy year 2013 has developed as per expectation and is in balance. The Board and the Committee decided to recommend to the Annual General Meeting to close the 2013 policy year without further calls.

Review of open policy years

Skuld will apply its internal risk model to calculate the risk of deterioration for each policy year. In contrast to Solvency II where the risk horizon is the next 12 months, the risk of deterioration is calculated for the full development of the individual policy year. The risk model takes into consideration:

  • premium risk
  • reserve risk
  • market risk
  • counterparty risk
  • operational risk

Further, Skuld will apply the value at risk (VaR) with a confidence interval of 99.5% when assessing the risk of deterioration. For current policy years, all risk factors mentioned are relevant. For old policy years, only reserve risk, counterparty risk and operational risk are relevant.

Policy year 2014

The Policy year is assessed according to the model described above and due to its maturity the relevant risks are reserve risk, counterparty risk and operational risk. The Board decided to maintain the release call at 0%.

Policy year 2015

The Policy year is assessed according to the model described above and due to its medium maturity the relevant risks are reserve risk, counterparty risk and operational risk. The Board decided to maintain the release call a 5%.

Policy year 2016

The Policy year is assessed according to the model described above and since this is the running policy year all the risk factors above have been taken into consideration. The Board decided to reduce the release call to 10%.

Summary of policy years

2012: Closed
2013: Proposed to be closed by the AGM 8 September 2016
2014: Release call maintained at 0%
2015: Release call maintained at 5%
2016: Release call reduced to 10%

Yours faithfully,

Ståle Hansen
President and CEO

Assuranceforeningen Skuld (Gjensidig)